ICBC plans largest perpetual bond

Business | Agencies and Tereza Cai 17 Jul 2019

China's debt has been rising with ICBC (1398) planning to issue 80 billion yuan (HK$90.93 billion) perpetual bonds and local government debt in the first half worth 2.18 trillion yuan, accounting for 70 percent of the full-year limit.

ICBC will raise up to 80 billion yuan by issuing perpetual bonds in the interbank market this month, with the interest rate of 4.37-4.87 percent, the largest issuance of bank perpetual bond.

It came after Bank of China (3988) issued the first-ever perpetual bonds in January at a yield of 4.5 percent, alongside three mainland banks who issued a total of 150 billion yuan perpetual bonds. S&P said perpetual bonds will be a norm for mainland banks to raise funds.

China's local governments sharply accelerated their bond issuance in June as they looked to ramp up infrastructure spending to support economic growth that slowed to a 27-year low.

Net local government bond issuance rose to 717 billion yuan in June, the highest so far this year and accounting for a third of the first half's total, said finance minstry official Hao Lei.

Global debt levels jumped in the first quarter of 2019, outpacing the world economy and closing in on last year's record, the Institute of International Finance said.

Debt rose by US$3 trillion (HK$23.4 trillion) in the period to US$246.5 trillion, almost 320 percent of global economic output, the Washington-based institute said yesterday.

That's the second-highest dollar number on record after the first three months of 2018, though the debt was higher in 2016 and 2017 as a share of world GDP.

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