Chinese bank's AT1 offering drives APAC banks' debt issuance to $14B in August

Asia-Pacific banks' aggregate debt raising increased 21.7% year over year in August, driven by Agricultural Bank of China Ltd.'s Chinese yuan-denominated $5.49 billion bond offering to replenish its additional Tier 1 (AT1) capital.

The region's banks raised an aggregate $14.08 billion in debt securities in August, up from $10.30 billion in the prior month and from $11.57 billion raised a year earlier, according to data compiled by S&P Global Market Intelligence on a best-effort basis. Two banks from Mainland China accounted for 49% of the aggregate debt capital raised in the month, with Agricultural Bank of China's issuance being the largest offering.

Agricultural Bank of China said distribution rate on its AT1 bonds is 3.21% during the first five years and will be adjusted every five years. The bank will have conditional redemption rights on every distribution payment date since the fifth distribution payment date.

In addition to Agricultural Bank of China's AT1 issuance, billion-dollar issuances in August included Asian Development Bank's $4 billion US dollar-denominated nonconvertible debt issuance and Zhongyuan Bank Co. Ltd.'s $1.37 billion AT1 issuance.

Other notable issuers in the region included Dbs Bank Ltd. Australia Branch, Mizuho Financial Group Inc., Bank of Communications Co. Ltd. Hong Kong Branch, The Korea Development Bank, Commonwealth Bank of Australia and Westpac Banking Corp.

Equity offerings

Just two Asia-Pacific banks — Union Bank of India and Oversea-Chinese Banking Corp. Ltd. — completed equity transactions aggregating to $1.01 billion in August, extending a trend seen in the past months, the data shows. In July, total capital raised by the region's banks via equity securities stood at $790 million, while it was $3.87 billion in August 2022.

Union Bank of India raised 50 billion rupees in a qualified institutions placement of equity shares, priced 86.55 rupees per share. The state-owned bank said proceeds will augment its common equity Tier I ratio and overall capital adequacy ratio, each by about 84 basis points.