Bank of China set to release convertible bond

Subscriptions for $5.9bln issue beginning on Wednesday is part of fundraising wave by Chinese banks.

Bank of China, the country's No. 3 lender by assets, will issue 40 billion yuan ($5.9 billion) in bonds convertible into its Shanghai-listed A-shares this week, it said on Monday.

Subscriptions for the bond will start on Wednesday, the bank said in a statement to the Shanghai Stock Exchange, with existing shareholders getting priority.

Bank of China's bond issue is part of a broader effort by Chinese banks to raise funds to replenish their coffers after a lending spree in 2009.

The bonds will be convertible into the bank's Shanghai shares six months from completion of the issue, at a price of 4.02 ($0.59) yuan per share. Bank of China shares closed at 4.01 yuan on Friday, having fallen over 7 percent so far this year.

Because of a scheduled 2009 dividend payment of 0.14 yuan ($0.02) per share on June 3, the conversion price will change to 3.88 yuan ($0.57) per share from that date, the bank said.

Bank of China received approval for the bond issue last week, and President Li Lihui said last Thursday that it also hoped to complete its new Hong Kong share issue, the other component of its fundraising plans, by the end of this year.

View the full story in Reuters.