Beijing nod sought to boost $2b issue
The Bank of China (BOC) is awaiting approval from its Beijing headquarters to increase the size of its $2 billion note issue after a huge response from potential investors.
According to a circular issued by China's State Administration of Exchange Control, which took effect in June, the amount raised from debt issues by mainland bank overseas branches has to be reported to the headquarters.
The bank's original issue of a five-year floating rate certificate of deposit attracted subscriptions of $9 billion from more than 60 institutions.
Banking sources believe the issue will at least be doubled, although a $5 billion total has not been ruled out.
A BOC spokesman said the arranger, China Development Finance Company, was discussing the final size of the offering with BOC but declined to comment on when a decision would be made.
It is believed the delay was caused by the BOC having to report to its headquarters for approval.
If the issue surpasses Hongkong Bank's $4.75 billion issue in May, it will take the title for the largest such fund raising in the territory The feverish response to the BOC offering was despite a medium Baa1 rating assigned by Moody's Investors Service. BOC decided to cancel an issue last year after being downgraded by Moody's.
The capital market has been expecting another issue after the change of regulations of the Hong Kong Monetary Authority, which recognises ratings from more international agencies for the liquidity adjustment facility.