Bank of China sells additional $900 million of tier-two notes

Bank of China today issued a $900 million tap of tier-two subordinated notes, taking its total sale of tier-two notes to $2.5 billion. The notes carry a coupon of 5.55%, and mature in 2020. In addition, Bank of China is expected to sell up to CNY40 billion ($5.9 billion) in similar notes, which will be convertible into its Shanghai A-listed shares.

Bank of China is undertaking the tier-two capital raise in order to comply with a tightening in Chinese capital adequacy requirements. Industrial & Commercial Bank of China estimates that China’s four largest banks need around $70 billion of capital to comply with domestic regulatory rules.

Chinese regulators are cracking down on banks as the country’s economic growth shows no signs of abating. Today it was announced that property prices increased 11.7% year-on-year accross 70 cities, despite a tightening in bank lending.