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BOCI successfully executed NCB’s landmark transaction of USD1.2 billion Basel III Compliant Non-Cumulative Subordinated Additional Tier 1 Capital Securities
 

BOCI successfully executed the landmark transaction of USD1.2 billion Basel III Compliant Non-Cumulative Subordinated Additional Tier 1 Capital Securities issued by Nanyang Commercial Bank ("NCB") on 2 June 2017. The transaction marks the largest AT1 issuance by a local commercial bank in Hong Kong, which is also the debut capital market transaction completed by NCB in the international market and the first Basel III Compliant Additional Tier I capital offshore transaction completed by NCB. BOCI has acted as one of the JGCs in this important milestone transaction.

 

NCB’s issuer rating is A3 by Moody's with stable outlook and the issue rating this time is Ba2 by Moody's. Strong demand with scarcity value of supply from this sought after issuer result in over USD 3.7 billion of orders and 3.08x oversubscription despite the headwind caused by the unexpected China sovereign rating downgrade by Moody's on the day prior to pricing of the transaction. This is also the first transaction by a Chinese financial institution in the Asia ex-Japan G3 currency market following Moody’s unexpected rating downgrade of China sovereign rating from Aa3 to A1. The demand by international investors is a solid testimony to the good credit story of the Bank as well as a vote of confidence to Chinese background financial institution credit.

 

Tightening of 37.5bps from initial price guidance to final pricing represents one of the largest tightenings in Asia ex Japan G3 currencies bond market YTD with diversified investor base with participation of funds, asset managers, corporates, banks and private bank accounts. Issue spread is equivalent to T5+320.5 bps, representing one of the lowest credit spreads achieved by a Chinese bank in the offshore AT1 issuance space.

 

NCB is a leading Hong Kong commercial bank wholly owned by China Cinda Asset Management which in turn is fully controlled by the Ministry Of Finance of China. NCB has been ranked stably among top 10 local commercial banks with good brand name recognition in Hong Kong.

 

What is noticeable is that BOCI has successfully assisted Nanyang Commercial Bank to complete a number of milestone projects, showing BOCI's highly recognized strength in global capital market. BOCI acted as Joint Financial Advisor to help BOCHK transfer its stakes in Nanyang Commercial Bank to China Cinda Asset Management. The transaction was successfully completed in 2016. The deal represents a first time listing of the overall equity of the offshore bank held by a state-owned financial institution at a domestic assets exchange. The deal also marks the largest commercial bank M&A transaction in Asia (ex-Japan), and the largest financial institutions M&A transaction in PRC through domestic exchange process.

 

BOCI is the investment banking arm wholly owned by Bank of China Group. We provided customers with a comprehensive range of financial services and products, including corporate financing, mergers & acquisitions, financial advisory, securities brokerage, fixed income, private banking, asset management, private equity derivatives, leveraged and structured finance, and global commodities. Over the years, BOCI has taken a leading position in the fields of IPO, stock trading, bond issuance, as well as in the capital market of the Mainland of China.

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