Agricultural Bank issues 120 billion yuan of sustainable debt
Increase the primary capital adequacy ratio by more than 0.8%.
On September 6, the Agricultural Bank of China announced that its sustainable debt (the second issue) had been issued. The announcement shows that the bonds were booked and filed on September 3, 2019 and issued on September 5, 2019. The bond issuance scale is RMB 35 billion yuan, with the coupon rate of 4.20% in the first five years. According to a query from the Journal of Securities, the bond is interest-paying floating rate and the starting date is September 5.
In 2018, the Agricultural Bank of China, approved by the shareholdersmeeting, intends to issue write-down capital bonds of no more than 120 billion yuan in the domestic market. In August this year, the Agricultural Bank issued a bulletin that the sustainable bonds obtained the administrative permission of the central bank to issue. Then, on August 16 and September 3, the Agricultural Bank of China successfully issued the sustainable bonds on the scale of 85 billion yuan and 35 billion yuan. With the successful issuance of the second issue of sustainable bonds, the issue of sustainable bonds by Agricultural Bank of China has become the largest single-type first-class capital instrument issue in Chinas banking industry up to now.
The issue of sustainable debt has a positive effect on the supplementary capital of ABC. According to the reporter of Securities Daily from ABC, in terms of the medium-term risk-weighted assets of ABC in 2019, the issue of sustainable debt will increase the capital adequacy ratio of ABC by more than 0.8 percentage points, serving the real economy, agriculture, countryside and farmers. Battalion and small and micro enterprises provide strong support.
According to the reporter of Securities Daily, since January this year, the Bank of China first approved the issue of no more than 40 billion yuan of sustainable debt. Up to now, six commercial banks, including Bank of China, Minsheng Bank, Huaxia Bank, Pudong Development Bank, Industrial and Commercial Bank and Agricultural Bank, have successfully issued sustainable bonds with a total scale of 350 billion yuan. Among them, Agricultural Bank of China has the largest issuance scale, followed by Industrial and Commercial Bank of China (ICBC) of 80 billion yuan, and several joint-stock banks and Bank of China of 30 billion to 40 billion yuan.
In February this year, the executive meeting of the State Council proposed to improve the efficiency of examination and approval of the issue of sustainable bonds for commercial banks. In terms of the issuance time of sustainable bonds, except for the issue of Bank of China in January, the rest are all after May. Meanwhile, of the 350 billion yuan of sustainable bonds issued this year, 230 billion yuan have been issued since the second half of the year, which shows that the issue of sustainable bonds is obviously accelerating.
Securities Daily reporter noted that since mid-year, the interest rate of sustainable debt is in a downward trend. In January this year, the coupon rate for the first five years of issuing sustainable bonds by the Bank of China was 4.5%. In May and June, the coupon rates for the first five years of issuing sustainable bonds by Minsheng Bank and Huaxia Bank were 4.85%. After that, the coupon rates for the first five years of issuing sustainable bonds by Pudong Development Bank, ICBC and Agricultural Bank were 4.73% and 4.73% respectively. 4.45%, 4.39% and 4.20%.
Supplementation of other primary capital
Sustainable debt and preferred stock are other primary capital instruments. In recent years, commercial banks replenish more capital by issuing preferred shares, while sustainable debt has only just begun this year, but the landing effect is remarkable.
According to the information released by the Banking Insurance Regulatory Commission on September 2, the capital adequacy rate of commercial banks has reached 14.12%, up 0.58 percentage points from the same period last year. Risk resilience remains stable.
However, among the primary capital of commercial banks, the core capital is relatively high and the proportion of other primary capital is very low. According to the preliminary calculation of the semi-annual reports of listed banks, the difference between the capital adequacy ratio of many banks and the core level I capital adequacy ratio is less than 1%. Some analysts said that in the current context of limited core capital replenishment, it is particularly important for commercial banks to increase the capital adequacy rate and enhance the support of commercial banks to the real economy.
For the issue scale of sustainable bonds, Guoxin Securities forecasts, assuming that by the end of 2019, commercial banks will choose to issue more other first-class capital, instead of using core first-class capital to meet the requirements of other first-class capital, so that the proportion of other first-class capital reaches 1% of credit risk-weighted assets, then commercial banks will be the most. More than 600 billion yuan of sustainable debt can be issued.
At present, besides listed banks, Bohai Bank will issue 20 billion yuan of fixed-term capital bonds on September 11, and it will become the first non-listed bank in China to issue sustainable bonds. On the 6th of last month, Guangfa Banks application for the issuance of sustainable bonds was approved by the Banking and Insurance Regulatory Commission, with a planned issuance scale of no more than 50 billion yuan.
Source: Liable Editor of Securities Daily: Yang Qian_NF4425