PSBC opens books for Asia’s biggest bank capital offering |

By Carol Chan

HONG KONG, Sept 21 (IFR) – Postal Savings Bank of China (A2/A/A+) is marketing US dollar Additional Tier 1 securities at an initial price guidance in the 4.85 percent area, in a deal expected to be the largest of its kind in Asia.

The size of the Reg S perpetual non-call five offering is capped at the US dollar equivalent of 50 billion yuan ($7.6 billion).

The issue is poised to surpass Bank of China’s $6.5 billion AT1 benchmark from October 2014 as Asia’s largest bank capital offering and come close to the region’s biggest US dollar bonds, Alibaba Group Holding’s $8 billion debut in 2014.

The state-run bank, China’s sixth-largest in asset terms, will use the proceeds to replenish its capital and to support its business development.

The non-cumulative perpetual offshore preference shares have an expected Moody’s rating of Ba3.

A trigger event will occur if PSBC’s Core Tier 1 capital adequacy ratio falls to 5.125 percent or below, or the earlier of either the China Banking Regulatory Commission deems the bank non-viable without a conversion or write-off, or a public-sector injection of capital is necessary.

If a trigger event occurs, the issuer will have to convert all or some of the outstanding AT1s into ordinary H-shares at the effective conversion price, initially set at HK$4.83 per share.

PSBC’s H shares closed at HK$4.62 yesterday. Its Core T1 CAR stood at 8.72 percent as at end-June.

CICC HK Securities, Goldman Sachs, JP Morgan, UBS, Morgan Stanley, Bank of America Merrill Lynch, ICBC (Asia), HSBC and DBS Bank are joint global coordinators on the AT1 offering.

The nine banks are also joint bookrunners and joint lead managers with Haitong International, ICBC International, CCB International, ABC International, Citic CLSA Securities, BOC International, Huarong Financial, Standard Chartered Bank, Ping An of China Securities (Hong Kong), China Merchants Securities (HK), Credit Agricole and Deutsche Bank.

The offering is expected to price today.

(Reporting by Carol Chan; Editing by Dharsan Singh and Daniel Stanton)

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