On June 24, IB announced that it had successfully issued write-down secondary capital bonds worth RMB 20 billion in the inter-bank market. As market investors had a high recognition to the issue of bonds, the subscription ratio of the whole issue hit 1.56 and the funds raised were all received. According to the estimation at the end of the first quarter of 2014, the corporate banking capital sufficiency of the bank reached 11.50%, up 0.86% compared with that before the supplementation.
The bonds issued this time are 10-year fixed interest rate, with the issuer’s redeeming right attached conditionally in the 5th year, and the coupon rate of the bonds is 6.15%.
After the issuance of secondary capital bonds and capital supplementation, according to the estimation at the end of the first quarter of 2014, the capital sufficiency of the group reached 11.89%, up 0.83% compared with that before the supplementation, and the corporate banking capital sufficiency reached 11.50%, up 0.86%.
According to the introduction of relevant person-in-charge of IB, the bank has actively explored the innovation in write-down and convertible capital tools after the implementation of the “Basel New Capital Accord”. This successful issuance of write-down secondary capital bonds worth RMB 20 billion is one of the large one with low interest rate among all domestic commercial banks after the China Banking Regulatory Commission (CBRC) enforced the Measures on the Administration of Capital of Commercial Banks (Interim) in 2013. In recent years, IB has always committed itself to innovation in capital tools and active liabilities. As early as 2003, it became the first bank issuing long-term secondary debts to supplement capital in China, with an issue scale of RMB 3 billion. In 2005, the bank initiated hybrid capital debts to supplement capital for the first time, raising capital of RMB 4 billion successfully. In 2011, the bank became the first one issuing special-purpose financial bonds for loans to small- and mini-sized enterprises, with an issue scale of RMB 30 billion.
As indicated by IB, the bank can keep a reasonable capital lever in capital structure to supplement capital by issuing secondary cap ital bonds, and this is in favor of improving the company’s rate of return of net assets and increasing the level of returns to shareholders. Meanwhile, the effective supplementation of capital will also further fortify the risk resistance of the company, improve its overall strength to serve the real economy, and facilitate the sustained and sturdy development of all businesses of the bank.