China bond house: Bank of China

IFR Asia Awards 2020
3 min read
Carol Chan

Unstoppable force

China’s economy was the first to be hit by the Covid-19 pandemic in early 2020, and Bank of China took a leading role in mobilising the capital markets in response.

On February 11, shortly after the Lunar New Year break, BOC was one of the joint global coordinators on the first Covid-19 themed bond from a Chinese issuer in the offshore market, helping policy bank Agricultural Development Bank of China raise Rmb1.5bn (US$230m) from a tap of an existing Dim Sum bond.

As an issuer, BOC in February pioneered the sale of Covid-19 social bonds in Hong Kong dollars and Macau patacas to fund loans to help small companies in Macau mitigate the impact of the outbreak.

In the onshore market, BOC was the lead underwriter and bookrunner on the Asian Infrastructure Investment Bank’s Rmb3bn debut Panda bond in June and joint underwriter on New Development Bank’s two Panda issues in April and July. Proceeds contributed to the two multilateral development banks’ sustainable development activities, including Covid-related programmes.

The A1/A/A rated lender continued the ESG theme when it brought the world’s first blue bonds from a commercial bank with a US$942m-equivalent dual-currency deal in September to support ocean conservation, split between two tranches from its Paris and Macau branches.

BOC maintained a healthy lead over its rivals as China’s most international and diversified bank. It was the top Chinese underwriter of international bonds, handling US$11.3bn of Chinese G3 currency bonds during the awards period for a 6.1% market share, according to Refinitiv data. It handled 146 G3 issues for Chinese clients and was equally comfortable leading deals for issuers from other countries, making it one of the busiest banks in the Asian market overall.

Leveraging its wide range of relationships in China and its global network, BOC arranged offshore bonds for the central government, Chinese local government financing vehicles, central state-owned enterprises, financial institutions and property developers.

BOC played a key role in the two landmark sovereign deals of the year. China in October priced a US$6bn 144A/Reg S benchmark, the first time it has targeted US investors since 2004, before returning a month later with a €4bn offering that included the country’s first bond to price at a negative yield.

It also helped bring state oil majors Sinopec and CNPC back to the US dollar market after oil prices stabilised in the summer, the latter for the first time since 2014, and helped ChemChina raise US$3bn in two currencies in September even after the US had added it to a controversial list that hinted at future restrictions.

BOC also helped bring a number of private sector clients to the offshore market for the first time, including Xiaomi, Meituan, Tencent Music Entertainment, and battery maker Contemporary Amperex Technology.

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