Construction Bank issues debt bonds
By Da Shan (China Daily)
Updated: 2004-09-14 08:38

China Construction Bank, one of the country's four largest State-owned banks, plans to issue up to 10 billion yuan (US$1.2 billion) in subordinated debt on Friday.

The bank plans to issue 8 billion yuan (US$963 million) in 10-year bonds, and has reserved an option to expand that to 10 billion yuan (US$1.2 billion), depending on investor demand.

This will be the second sale of debt by the bank, and it will replenish its capital base ahead of a planned initial public offering.

The bank issued 15 billion yuan (US$1.8 billion) in subordinated bonds in the first sale in July.

According to industry experts, issuance of subordinated debt is an effective measure for banks to increase their capital adequacy level.

China Construction Bank has been approved by the People's Bank of China and China Banking Regulatory Commission to issue no more than 40 billion yuan (US$4.8 billion) worth of such bonds.

After issuing all the bonds, the bank's capital adequacy level will reach more than 8 per cent.

With the aims of increasing the bank's capital strength, optimizing capital structure and diversifying ownership, the bank also plans to usher in foreign company investors as equity owners.

The bank, which won a US$22.5 billion bail-out from the government in December last year, was chosen by the central government as a pilot project to turn it into a joint stock bank.

Bank President Zhang Enzhao said earlier that his bank's goal was to establish a modern share-holding commercial bank that would make it a competitive heavyweight in the global financial market.

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