Top news
Chinese banks heed Tier 2 call
Emerging Markets Supply rocketed in the interbank market in September – with more to come
BY CAROL CHAN
#HINESEûBANKSûAREûACCELERATINGû
THEIRûISSUANCEûOFûONSHOREû4IERûû
BONDSûTOûREPLENISHûCAPITALûASûAû
LARGEûAMOUNTûOFûNOTESûTHEYû
ISSUEDûINûûANDûûWILLû
STARTûTOûTURNûCALLABLEûINû
!CCORDINGûTOûDATAûFROMû#HINAû
#ENTRALû$EPOSITORYûû#LEARINGû
4ûBONDûISSUANCEûINû#HINASû
INTERBANKûBONDûMARKETû
INCREASEDûûYEARûONûYEARûINû
3EPTEMBERûTOû2MBBNû
53BN ûBRINGINGûTHEûTOTALû
FORûTHEûlRSTûNINEûMONTHSûTOû
2MBBNûUPûûFROMûTHEû
SAMEûPERIODûINû
4HEûJUMPûISûALLûTHEûMOREû
DRAMATICûWHENûCOMPAREDûWITHû
#HINASûBROADERûBONDûMARKETû
4OTALûBONDûISSUANCEûINûTHEû
INTERBANKûMARKETûROSEûûINû
3EPTEMBERûTOû2MBTRNûANDû
ûTOû2MBTRNûINûTHEûlRSTû
NINEûMONTHSûACCORDINGûTOû
##$#
.ICHOLASû:HUûAû-OODYSû
SENIORûANALYSTûEXPECTSûTHEûmOODû
OFûONSHOREû4ûBONDûSUPPLYûWILLû
CONTINUEûINûTHEûNEARûTERMûASû
BANKSûNEEDûTOûREPLENISHûCAPITALû
GIVENûTIGHTERûCONTROLSûONû
INVESTMENTûINûSHADOWûBANKINGû
PRODUCTSûANDûAûPOTENTIALûRISEûOFû
BADûLOANSûASûTHEûECONOMYûSLOWSû
DOWN
h2AISINGûEXTRAûCAPITALûTHROUGHû
THEûSTOCKûMARKETûISûVERYûDIFlCULTû
NOWûASûTHEû!
SHAREûMARKETû
UNDERPERFORMSûWHEREASûTHEû
BONDûMARKETûINûCOMPARISONû
STILLûHASûROOMûFORûMOREûBANKû
ISSUANCEvûSAIDû:HU
:HUûSAIDûAûLARGEûAMOUNTûOFû4û
PAPERûISSUEDûINûûANDûû
WILLûSTARTûTOûTURNûCALLABLEûINûû
ANDûISSUERSûNEEDûTOûLINEûUPû
funds to redeem those
SECURITIES
!CCORDINGûTOû##$#ûDATAû
#HINESEûLENDERSûISSUEDû
2MBBNûANDû
2MBBNûOFû4ûBONDSûINû
ûANDûûRESPECTIVELYû
ANDûMOSTûOFûTHESEûAREû
YEARû
NON
CALLûlVEûNOTES
h4HEûMARKETûEXPECTSûTHESEû4û
BONDSûWILLûBEûCALLEDû)FûISSUERSû
DECIDEDûNOTûTOûCALLûTHATûWOULDû
FRUSTRATEûMARKETûEXPECTATIONSû
WHICHû)ûTHINKûISSUERSûANDû
REGULATORSûWOULDûNOTûWANTûTOû
SEEû-OREOVERûSOMEû4ûBONDSû
HAVEûCOUPONûSTEP
UPûFEATURESûIFû
NOTûCALLEDû(ENCEûSOûFARûTHEREûISû
NOûSIGNûOFûNON
CALLûEVENTSûFROMû
4ûBONDûISSUERSvû:HUûSAID
(EûNOTEDûTHATûCOREû4IERûû
CAPITALûnûMAINLYûEQUITYûnûFORû
MOSTûPUBLICLYûLISTEDûBANKSûISû
ADEQUATEûBUTûTHATûTHEYûSTILLû
NEEDûTOûBEEFûUPûOTHERûCAPITALû
BUCKETSûTHROUGHûOFFERINGSûOFû
!DDITIONALû4IERûûANDû4û
NOTES
4ûISSUERSûINû3EPTEMBERûANDû
/CTOBERûINCLUDEDûTHEûBIGûlVEû
STATE
OWNEDûBANKSûNATIONALû
JOINT
STOCKûCOMMERCIALûLENDERSû
LIKEûCHINA CITIC BANK and SHANGHAI
PUDONG DEVELOPMENT BANKûCITYû
COMMERCIALûLENDERSûSUCHûASû
ZHONGYUAN BANK and ZHEJIANG
CHOUZHOU COMMERCIAL BANKûANDû
RURALûCOMMERCIALûLENDERSûLIKEû
FUJIAN CHANGLE RURAL COMMERCIAL
BANK and SHANXI QINGXU RURAL
COMMERCIAL BANK
4HEûMOSTûSTRIKINGûNAMEûWASû
the EXPORT-IMPORT BANK OF CHINAû
WHICHûBECAMEûTHEûONLYûPOLICYû
BANKûTOûISSUEû4ûNOTES
)TûPRINTEDû2MBBNûOFû
YEARû
NON
CALLûlVEû4ûNOTESûATûû
ONû3EPTEMBERûûANDû
SUBSEQUENTLYûISSUEDûANOTHERû
2MBBNûTRANCHEûATûûONû
/CTOBERû
BANK OF CHINAûRAISEDû2MBBNû
FROMû4ûBONDSûINûTWOûTRANCHESû
WHILEû#HINAû#ITICû"ANKûPRICEDû
2MBBNûOFû4ûBONDSûINûTWOû
TRANCHESûINûTHEûPASTûTWOû
MONTHS
&ORûRURALûCOMMERCIALûLENDERSû
SIZESûHAVEûBEENûASûSMALLûASû
2MBMûLIKEûTHEûOFFERINGû
FROMû3HANXIû1INGXUû2URALû
#OMMERCIALû"ANKûWHICHûPRICEDû
Aû
YEARûNON
CALLûlVEûATû
TRADE WAR
"ANNYû,AMûHEADûOFûRESEARCHûATû
#%"û)NTERNATIONALûSAIDû#HINESEû
BANKSûCAPITALûNEEDSûWOULDû
REMAINûHUGEûDUEûTOûSTRICTERû
CAPITALûRULESûANDûDETERIORATINGû
ASSETûQUALITYûASû#HINAûGRAPPLESû
WITHûANûESCALATINGûTRADEûWARû
WITHûTHEû53û&EDûMONETARYû
TIGHTENINGûANDûWEAKûEMERGINGû
MARKETûCURRENCIES
h7ITHû#HINASû!
SHAREûMARKETû
EXPECTEDûTOûCONTINUEûTOû
mUCTUATEûANDûFACEûPRESSUREûINû
THEûSHORTûTERMûBANKûCAPITALû
SECURITIESûAREûLIKELYûTOûREMAINû
ONEûOFûTHEûMAJORûINSTRUMENTSû
FORûBANKSûTOûBOOSTûTHEIRûCAPITALvû
SAIDû,AM
4HEû#HINAûBANKINGûSYSTEMSû
COMMONûEQUITYû4IERûûRATIOû
STOODûATûûASûOFûEND
*UNEû
COMPAREDûWITHûAûREGULATORYû
REQUIREMENTûOFûnûFORû
SYSTEMICALLYûIMPORTANTûBANKSû
ANDûûFORûOTHERûBANKSû
ACCORDINGûTOû-OODYS
-OODYSûSAIDûTHEûFULLûPHASE
INû
OFûAûCAPITALûCONSERVATIONûBUFFERû
BYûEND
ûWOULDûRESULTûINû
HIGHERûREGULATORYûCAPITALû
REQUIREMENTSû!TûTHEûSAMEûTIMEû
RISK
WEIGHTEDûASSETSûGROWTHû
WOULDûREMAINûHIGHERûTHANûTOTALû
ASSETûGROWTHûASûAûRESULTûOFûTHEû
MIGRATIONûOFûSOMEûPREVIOUSû
SHADOWûBANKINGûASSETSûBACKûTOû
LOANSûONûBANKûBALANCEûSHEETS
h"ANKSûTHATûEXPERIENCEûFASTû
GROWTHûINû27!SûCOULDûBEû
CHALLENGEDûINûTHEIRû
MANAGEMENTûOFûCAPITALISATIONû
WITHOUTûEXTERNALûCAPITALû
INJECTIONSûBECAUSEûTHEûINTERNALû
GENERATIONûOFûCAPITALûFROMû
RETAINEDûEARNINGSûALONEûMIGHTû
NOTûBEûABLEûTOûSUPPORTûRAPIDû
GROWTHûINû27!SvûTHEûRATINGû
AGENCYûSAIDûh4HESEû
DEVELOPMENTSûWILLûCONTINUEûTOû
DRIVEûBANKSûCAPITALûRAISINGûINû
THEûNEXTûûTOûûMONTHSvû
Reach the people who matter
IFR provides an unrivalled opportunity for advertisers to reach
the most senior professionals in the world’s capital markets
For more information on the various advertising and sponsorship opportunities available within IFR,
email: cmi.advertising:@tr.com