China Bond House: Bank of China

IFR Asia Awards 2021
3 min read
Carol Chan

Endless innovation

As China’s most international and diversified bank, Bank of China continued to show leading underwriting capabilities in both onshore and offshore markets and demonstrate product innovation.

The A1/A/A rated lender scored a few firsts in 2021, including new structures that set it apart from its peers.

In January 2021, BOC issued a US$778m-equivalent dual-currency Reg S deal – the first climate transition bonds from China. The same month, it issued the first Yulan bond, a new Euroclear-settled format that makes it easier for international investors to buy bonds registered in China. The US$500m 0.75% three-year note was priced at Treasuries plus 67bp.

In August, BOC issued the first Sonia-linked bond from a Chinese issuer when it priced a £300m (US$408m) two-year floater. In September, it raised US$580m-equivalent from a multi-currency Reg S bond offering that included the world’s first biodiversity-themed green bond.

In October, the bank brought the world’s first US dollar sustainability “re-linked” bond to the market, raising US$300m from the 1% three-year deal. The trade is tied to the performance targets of a portfolio of underlying sustainability-linked loans.

But BOC did not apply all its bookrunning skills just to its own transactions. It also brought outstanding trades for external clients.

In the Panda market, it was the sole lead on Hungary’s Rmb1bn (US$156.8m) three-year green deal in December, the first green sovereign Panda bond in China’s interbank bond market.

In June, BMW printed a Rmb3.5bn dual-tranche bond, the first public Panda deal from a European corporate issuer, setting a template for more multinational corporations to follow. BOC was the lead underwriter and lead bookrunner on the transaction as well as on BMW’s two further public Pandas later in the year.

In the Dim Sum market, BOC was one of the leads of the first batch of Chinese local government bonds to hit the offshore renminbi market – the CNH deals from the Shenzhen municipal government and Guangdong provincial government.

BOC was also one of the leads for State Power Investment Corp’s US$900m perpetual non-call three preference share offering in November, which opened a new offshore fundraising route for Chinese state-owned enterprises.

In addition to its ability to innovate, BOC leveraged its wide range of relationships in China and its global network.

BOC was ranked second in the league table for renminbi bond offerings, with deal volume of Rmb1.2trn for a 6.8% market share, and racked up around US$12bn of league table credit for G3 bonds from Asia ex-Japan, making it the top-ranked Chinese house.

Other than Chinese issuers, BOC also worked with borrowers such as Pakistan and Saudi Aramco in 2021, adding value by introducing Chinese anchor orders to their bond trades.

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