On December 11, China CITIC Bank successfully issued CNY 40 billion of undated capital bonds in 2019 to help the bank expand its capital replenishment channels, improve capital quality and capital adequacy ratio, strengthen its ability to resist risks, and further enhance the quality and efficiency in serving the real economy.
Prior to this bond issuance, China CITIC Bank has conducted multiple roadshow presentations across regions. In addition to traditional investors such as state-owned banks and joint-stock banks, it also attracted dozens of investors including policy-based financial institutions, city commercial banks, rural commercial banks, insurance companies, securities firms, funds, QFIIs, financial companies and other diversified financial institutions for subscription. The final bond issuance price is 4.20%, which is 121 BPs higher than the average value of five days before the announcement date of the 5-year mid-term Treasury bond yield to maturity, and the subscription rate is as high as 2.9, which reflects the investor’s recognition of China CITIC Bank’s long-term stable operating ability.
Undated capital bonds, also known as perpetual bonds, refer to bonds without a clear maturity time or with a very long maturity term (usually more than 30 years). This is a kind of innovative capital supplementary tools first introduced by the regulatory authority in January 2019. These undated capital bonds issued by China CITIC Bank have a credit rating of AAA. The entity with good credit quality can provide a reliable risk investment income. It’s in line with the relevant requirements of the central bank’s policy “including bank perpetual bonds with a rating not lower than AA into the scope of eligible collateral for MLF, TMLF, SLF and refinancing”. After the issuance of undated capital bonds, China CITIC Bank will further consolidate its capital strength and effectively increase its support for the real economy such as agriculture, rural area and the welfare of farmers, private businesses and small and micro-businesses.