China banks to raise $12.34bn bonds in Hong Kong

Bank of China and BoCom mull to issue up to $30.84bn in bonds despite market doubts that Hong Kong can accommodate such a massive fundraising.

Chinese banks have announced plans to raise a total RMB 80 billion ($12.34 billion) from bond sales over the next two years in Hong Kong as they look to tap a market with lower fundraising costs, despite market doubts that the city can accommodate such a massive wave of fundraising.

China Minsheng Banking Corp. Ltd. said on Friday that it planned to issue subordinated bonds worth up to 1% of its total assets in Hong Kong with a maturity of a maximum of 10 years.

Based on total assets as of the end March, the bank could raise up to RMB 20.427 billion ($3.15 billion) from the bond issuance.

In April, Bank of Beijing Co. Ltd., China Merchants Bank Co. Ltd. and Huaxia Bank Co. Ltd. announced their respective plans to raise a combined RMB 26 billion ($4 billion) in Hong Kong over the next two years.

Industrial Bank Co. Ltd. said in late March it planned to sell up to RMB 50 billion ($7.71 billion) worth of bonds in Shanghai or Hong Kong by the end of 2012, using the proceeds to acquire assets, and planned to increase its stake in subsidiary Union Trust Ltd.

Bank of China Ltd. and Bank of Communications Co. Ltd. have also announced plans to issue up to RMB 200 billion ($30.84 billion) in bonds, respectively, by the end of 2012.

View the full story in Business China.