Asia-Pacific banks' debt issuance volumes nearly doubled year over year in May, driven by two mainland Chinese banks' efforts to strengthen their loss-absorbing buffers.
The region's banks raised $27.16 billion in debt securities in May, compared with $14.30 billion a year ago, according to data compiled by S&P Global Market Intelligence on a best-efforts basis. The increase was driven by two global systemically important banks (G-SIBs), Industrial and Commercial Bank of China Ltd. (ICBC) and Bank of China Ltd., issuing a total of $9.68 billion in yuan-denominated non-capital bonds to improve their total loss-absorbing capacity. ICBC issued $4.15 billion in 2.25% and 2.35% bonds, while Bank of China raised $5.53 billion with similar coupons.
Major mainland Chinese banks are actively driving debt issuance volumes in the Asia-Pacific region as they seek to meet total loss-absorbing capacity (TLAC) requirements for G-SIBs. Aside from ICBC and Bank of China, mainland China is home to three other G-SIBs: China Construction Bank Corp., Agricultural Bank of China Ltd. and Bank of Communications Co. Ltd., according to the list issued by the Basel-based Financial Stability Board in November 2023. The five mainland Chinese G-SIBs have announced plans that will see them issue approximately 440 billion yuan.
In addition to ICBC and Bank of China, other mainland Chinese banks that raised capital via debt securities in May were Guangzhou Rural Commercial Bank Co. Ltd., Asian Infrastructure Investment Bank, Bank of Zhengzhou Co. Ltd. and China Everbright Bank Co. Ltd., according to Market Intelligence data.
Elsewhere in the region
Australian banks remained active in the capital markets in May, raising an aggregate $6.26 billion in debt capital, the data shows. Westpac Banking Corp. completed the largest debt offering among Australian banks — valued at $2.25 billion — and accounted for more than half of the capital they raised in May.
The May data came after analysts told Market Intelligence that Australian banks were likely to remain active as they prepare to meet TLAC requirements and finance upcoming redemptions under the Reserve Bank of Australia's term funding facility. The three-year facility allowed banks to access cheap capital during the COVID-19 pandemic. The last possible maturity date for funds drawn under the facility is June 30.
Other notable offerings during May included Asian Development Bank's $3.50 billion bond issue and Standard Chartered Bank (Singapore) Ltd.'s euro-denominated, $543.8 million note issue. Banks from Malaysia, Singapore, Hong Kong, the Philippines, Mongolia, Indonesia and India also completed debt offerings in May.
