Allen & Overy said today that Bank of Communications Co., Ltd. (“BoCom”) USD1.63 billion cross-border Basel III compliant bond, the first by a mainland Chinese bank, highlights the increasing use of international markets by Chinese banks.

Hong Kong based capital markets partner John Lee commented: “In mainland China, banks are increasingly looking to raise funds from international markets with a view of using this liquidity to strengthen their own capitalisation. We are very honoured and pleased to be involved in this landmark transaction and would expect a number of, and more complex, Basel III compliant securities offerings by banks in China in the coming months."

Dual-listed in Hong Kong and Shanghai, BoCom is China’s fifth largest commercial bank, with total assets of USD1,013bn as at 30 June 2014. 

The issue consisted of USD1.2 billion 4.50% Tier 2 Capital Bonds due in 2024 and EUR500 million 3.625% Tier 2 Capital Bonds due in 2026. J.P. Morgan, Citigroup, Bank of Communications Co., Ltd. Hong Kong Branch and HSBC were joint global coordinators on the U.S. dollar tranche, with Deutsche Bank, Credit Suisse, BNP PARIBAS and BOCOM International joining as bookrunners. Deutsche Bank, Credit Suisse and Bank of Communications Co., Ltd. Hong Kong Branch joint global coordinators on the euro tranche, with J.P. Morgan, Citigroup, HSBC, BNP PARIBAS and BOCOM International joining as bookrunners. Allen & Overy advised joint global coordinators and joint bookrunners on the USD and euro tranches.

BoCom will have the option, upon obtaining consent of the China Banking Regulatory Commission (CBRC), to redeem the US dollar tranche in full at the end of the fifth year or the euro tranche in full at the end of the seventh year after the dates of issuance. 

Partner John Lee led the Allen & Overy team with support from associates Jaclyn Yeap and Jessica Li.