Bank of China Weighs 120 bln Yuan Subordinated Bond Issue

The Bank of China (BOC) said Friday its largest shareholder, Central Huijin Investment, had proposed to sell up to 120 billion yuan (17.55 billion U.S. dollars) in subordinated bonds to raise capital.

Central Huijin is a division of China Investment Corp., the sovereign wealth fund.

The proposal will be discussed at a special shareholders meeting on March 23.

The bond issue, which would be the largest yet among Chinese banks, would be sold through the end of 2012. Maturities would be at least 5 years, according to the statement.

The interest rate would be set in reference to the market rate, and the method of repaying principal was still under discussion, the statement said. Principal might be repaid either in cash or other bonds.

China Construction Bank and the Shanghai-based Bank of Communications, began selling subordinated bonds in issues of up to 30 billion yuan and 80 billion yuan, respectively, last month.

The world's largest lender by market capitalization, the Industrial and Commercial Bank of China, approved a proposal last October to float up to 100 billion yuan of subordinated bonds through the end of 2011.

The fifth of the state-owned banks, Agricultural Bank of China, has been discussing a bond issue.

Source: Xinhua