China Bond House: Bank of China

IFR Asia Awards 2022
3 min read
Pan Yue

Strong connections

Bank of China stood out as the leading China bond house once again, as its well-connected DCM capabilities, continued innovation and ability to read the market allowed it to navigate a difficult year.

Chinese G3 currency bond volume dropped to US$65.9bn in 2022, from US$153bn the previous year, as the property sector struggled, Covid restrictions held back growth, and companies found it cheaper to fund onshore.

Bank of China still managed to find suitable issuers to take offshore, ranking fourth in the China G3 table with volume of US$2.6bn for a 4% market share, according to Refinitiv data.

For Chinese bonds in all currencies, Bank of China recorded a deal volume of US$178.7bn for second place in the league table with a 5.8% market share.

BOC drew on its integrated DCM capabilities around the world to serve international clients and find demand, even in tough circumstances.

The bank was one of the three leads for Syngenta Group’s US$500m 3.5-year bond, which managed to close successfully even when the issuer’s parent, China National Chemical Corp, was facing the threat of potential US sanctions.

The bank was a joint bookrunner on Siemens’ €2bn multi-tranche bond in August. It was also in the lead underwriter group for Hungary’s Rmb2bn 3.75% 2025 Panda, a repeat mandate.

BOC ranked second in the Panda bond league table with a market share of 19% for a deal volume of Rmb7.3bn (US$1.1bn). It earned clients’ trust with its strong understanding of government policy goals, involvement in onshore market infrastructure, and ability to bridge onshore and offshore markets.

The establishment of the Southbound Bond Connect in September 2021 allowed onshore investors to buy offshore notes and BOC grabbed opportunities as Dim Sum issuance grew by nearly a third in 2022.

BOC ranked fourth in the Dim Sum bond league table with Rmb8bn of deal volume for a 6.6% market share, and took lead roles in some of the most significant deals. It was the left lead for all three local government Dim Sum bonds: from Hainan province, Guangdong province and Shenzhen city.

Its Dim Sum efforts paired well with the bank’s growing ESG focus, as Hainan province’s Dim Sum was the first offshore blue and sustainable bond issued by a Chinese local government. In November the bank also arranged the first green Panda issued by a European corporate, Mercedes-Benz Finance.

As an issuer, too, BOC Frankfurt branch’s US$500m green note in June was the first deal aligned with the updated version of the Common Ground Taxonomy, which bridges differences between European and Chinese ESG standards – summing up BOC’s year as a conduit between East and West.

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