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.