China CITIC Bank International prices $400M and 1.33B yuan perpetual bonds
What's the deal? China CITIC Bank International has raised US$400 million and 1.33 billion yuan (US$196.5 million) through a sale of perpetual bonds, according to two term sheets reviewed by ReutersDealroom has a profile for this one. Try Dealroom →. The Hong Kong-based lender priced the US dollar tranche at a 5.00% yield and the offshore yuan tranche at 2.30%.
Why now? Both tranches priced well inside initial guidance of around 5.45% for the dollar bond and 2.90% for the yuan bond. Demand was strong: orders topped US$2.9 billion for the dollar tranche and 16.3 billion yuan for the yuan tranche before pricing.
What's the endgame? The securities are additional tier 1 bonds — bank debt that strengthens a lender's capital base and can absorb losses if the bank runs into serious trouble. Proceeds will be used for funding and general corporate purposes, and the bonds can be redeemed after five years, on July 22, 2031.
What could go wrong? MoodyDealroom has a profile for this one. Try Dealroom →'s is expected to rate the bonds Ba2, below investment grade, reflecting their loss-absorbing nature. The bank itself carries stronger marks: A3 with a stable outlook from Moody's and A- with a stable outlook from Fitch.
The signal: The tight pricing and heavy oversubscription point to solid investor appetite for capital instruments from Chinese lenders, even as bonds designed to take losses first sit lower on the ratings scale.
Read more: The Standard
Image credit: Ray Devlin
