ICBC raised $6.16bn via a Perp NC5 AT1 bond at a yield of 3.2%, 45bp inside the initial guidance of 3.65% area. The bonds have expected ratings of Ba1 (Moody’s), and received orders over $9bn, 1.5x issue size. Proceeds will be used to boost ICBC’s capital. The bonds are first callable on 24 September 2026, and if not called, the coupon will reset on 24 September 2026 at US 5Y Treasury + 236.8bp. There is a dividend stopper and there will be a permanent write-off if the China Banking and Insurance Regulatory Commission deems that the bank is unviable without a writedown or a bailout.
This is the largest AT1 issuance globally since Postal Savings Bank of China’s $7.25bn 4.5% Perp NC5 AT1s in 2017. ICBC’s AT1 was the second lowest AT1 yield in Asia and the lowest ever yield globally for an AT1 in the same rating range. Shinhan Financial Group set the lowest Asian AT1 yield in May when it issued $500mn sustainability perpetual non-call five AT1 notes at 2.875%. Shinhan AT1 is rated Baa3 by Moody’s, a notch higher than the Ba1 rating for ICBC’s AT1.
The new bonds are priced 52bp wider to its existing 3.58% Perp NC5 AT1s that yield 2.68%.