Chinese and Indian AT1s must evolve

Author: Ashley Lee | Published: 27 May 2015

The write-down terms for Additional Tier 1 (AT1) products are becoming standardised in Asia’s two largest jurisdictions, but banks in both countries will need to look offshore to raise Tier 1 capital according to Fitch.

The first quarter of 2015 was relatively quiet for offshore sales of Basel III-compliant bonds from Chinese banks. China Construction Bank became the first to come to market this year with a $2 billion deal – the largest Tier 2 from a Chinese bank yet. It listed on the Hong Kong Exchange on May 14.

Indian banks, however, have not yet gone offshore – but they’ll need to do so in order to raise adequate Tier 1 capital.

According to Fitch’s Banks AT1 tracker, which was released earlier this month, both Indian and Chinese banks issued...