China, the world’s second largest economy after the US, is likely to drive a bulk of dollar-denominated Basel III Tier-2 bonds or new-style bank capital volume as the country’s local banks look to shore up cheaper forms of funding.
The mainland’s top five banks have obtained approvals last year to issue a combined Rmb270 billion $43.5 billion worth of Basel III-compliant bonds from 2014 to 2016. The banks are Agricultural Bank of China, Bank of China, Bank of Communications, China Construction Bank and Industrial and Commercial Bank of China.
While that includes issuance in both onshore and offshore markets, Bank of America Merrill Lynch believes...