China continued to promote the capital markets as an alternative to bank lending in 2014, and Bank of China Group led the charge, scoring landmark deals in both the offshore and onshore markets.
Onshore, BOC, one of China’s Big Four commercial banks, became a top player in the domestic interbank market during IFR’s review period, helping to raise more than Rmb275bn (US$44.7bn) for its clients from around 250 deals, representing a market share of 10.5%.
Offshore, the group executed 45 G3 and 37 offshore renminbi transactions, showing its strength in bringing its mainland clients to the international capital markets.
BOC International, the group’s main offshore investment banking arm, consistently ranked in the top five among all underwriters on the major bond league tables. It was No 1 in G3 currency bond issuance for Chinese investment-grade corporations, and No 2 in Dim Sum, where it was the top-performing PRC bank.
BOC (Hong Kong) played its part in the world’s biggest Dim Sum market, while other overseas branches made their mark with offshore renminbi issues in their respective jurisdictions, helping drive the group’s expansion – and the Chinese currency – beyond the country’s borders.
The group kept on playing a key role in the internationalisation of the renminbi, bringing several new issuers to market and launching landmark bonds in several offshore centres, including the UK’s sovereign issue – the first Dim Sum bond from a foreign government.
It was the only Chinese bank to participate in all five of the largest overseas senior bonds from the state-owned sector, working with the likes of CNOOC, Sinopec and State Grid. It was also global co-ordinator on three of the four overseas bonds from China’s asset-management corporations, among the first out of an industry that is transitioning from a policy role to a commercial mandate.
BOC was also able to help its clients take advantage of some of the latest financial reforms in the PRC. One example was assisting property developer Greenland in bringing the first US dollar issue, under a new cross-border guarantee scheme, to raise US$1bn in June. The group’s two most significant offshore bonds of 2014 were both self-led transactions, but there was nothing routine about the two bank capital issues.
The BOC US$6.5bn preference share offering in October was the world’s largest Additional Tier 1 deal, despite being the first of its kind out of China.
Weeks later, a US$3bn 10-year non call five bond became the largest Basel III-compliant Tier 2 issue from Asia, ex-Japan.
The record-breaking deals scotched fears that China’s banks would struggle to manage the transition to new Basel standards, and set an important benchmark for others to follow.
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