Major Chinese banks helped drive a three-fold month-over-month spike in aggregate bond issuance by banks in the Asia-Pacific region in November, a month after they pledged to support the country's slowing economy by increasing lending.
Banks in the region raised an aggregate $28.77 billion in debt in November, up from $9.02 billion in October, though down from $40.40 billion raised in November 2021, according to data compiled by S&P Global Market Intelligence. The aggregate was driven by a multibillion-dollar local-currency-denominated amount of nonconvertible bonds issued by four Chinese banks: Industrial and Commercial Bank of China Ltd., Bank of Communications Co. Ltd., China Construction Bank Corp. and Ping An Bank Co. Ltd.
Major Chinese banks announced their commitment to support the real economy as the Chinese Communist Party's 20th National Congress got underway in October. The event concluded with President Xi Jinping's reelection as the nation's leader and an outline of the government's vision for the country over the next five years. The nation's authorities are focused on reviving economic growth as they seek to balance growing COVID-19 infections and the need to relax restrictions that have dragged on the economy.
The International Monetary Fund said in October it expects China's gross domestic product to grow 3.2% in 2022, lower than its previous forecast of 3.3%. GDP growth is projected to recover to 4.4% in 2023, according to the report.
Australia's Westpac Banking Corp. was the only other Asia-Pacific lender that raised over a billion dollars in nonconvertible bond issuance in November.
Strong local-currency bond volumes
Asia-Pacific banks continue to raise more capital via local currency-denominated bonds than U.S. dollar-denominated bonds, a trend seen among the region's banks after the U.S. Federal Reserve kicked off its aggressive rate hikes to counter inflation.
Chinese banks, among the biggest issuers of local-currency bonds, raised nearly $24 billion in yuan-denominated debt in November. Half of the top 30 issuers of local-currency corporate bonds in China were banks, including ICBC, China Construction Bank and Ping An Bank, according to data from the Asian Development Bank's Asia Bond Monitor, issued in November.
In total, U.S. dollar-denominated bonds issued by banks in November accounted for just 12% of the total. Most of the U.S. dollar bonds were issued by Australian and South Korean banks, with Westpac's $2.5 billion issuance accounting for more than half.
Equity issuance stays tepid
Total equity issuance by the region's banks in November reached $1.44 billion, higher than October's total of $1.34 billion but down from $4.71 billion raised in November 2021, the data shows. Just three banks issued equity instruments during the month, with Commonwealth Bank of Australia raising $1.29 billion through the issuance of convertible bonds.
