Yet another Chinese AT1 hits the market.  With response to last week’s Cinda AM Perp NC5 AT1 lukewarm, it will be interesting to see how investors take to this.  The new Cinda AT1 is currently 99-99.25 putting it at 4.625% YTC, squarely in line with the IPG on the China Citic AT1 (surely, this is more than a coincidence?)  At similar yields, China Citic would appear more interesting as the issue is rated Ba2, 2 notches higher than Cinda’s B1.  With the global macro backdrop firm overnight, thanks to our OPEC friends, I would be surprised if this doesn’t price at 4.375% or tighter.


Issuer: China CITIC Bank International Ltd
Issuer ratings: Baa1/–/BBB
Expected issue rating: Ba2/–/–
Basel-III compliant non-cumulative subordinated AT1 capital securities
Reg S
Distribution rate: Fixed rate, subject to fixed reset periods, payable semi-annually in arrears
Distribution rate reset: On the First Call Date and every 5 years thereafter, reset to a new fixed distribution rate equal to the then prevailing 5Y Treasury rate plus fixed initial spread. No step-up
Distribution payment: Fully discretionary and non-cumulative at the sole discretion of the Issuer Mandatory Distribution
Cancellation Event:
(i) When the Distributions scheduled to be paid together with any dividends or other payments on any Parity Obligations, exceed the Distributable Reserves at such Distribution Payment Date
(ii) The HKMA directs the Issuer to cancel such Distribution or applicable Hong Kong banking regulations or other requirements of the HKMA prevent payment in full dividends or other distributions when due on Parity Obligations
Dividend stopper: If scheduled Distribution payment is not made in full, the Issuer shall not:
(i) declare or pay in cash any distribution or dividend on any shares; or
(ii) purchase, cancel or otherwise acquire any shares or permit any of its subsidiaries to do so
Optional redemption: In whole, but not in part, on the First Call Date or any Distribution Payment Date thereafter. Subject to HKMA’s prior approval
Non-Viability loss absorption: If a Non-Viability Event occurs and is continuing, the Issuer shall reduce the then principal amount and cancel any accrued but unpaid Distribution by an amount equal to the Non-Viability Event Write-off Amount
Write-off amount: Permanent and partial write-off by an amount equal to the Non-Viability Event write-off amount
Non-Viability Event: The earlier of:
(i) HKMA notifying the Issuer that a Write-off or conversion is necessary
(ii) HKMA notifying the Issuer that a public sector injection of capital or equivalent support is necessary; without which the Issuer would become non-viable
H.K. Bail-in Power: The AT1 is subject to all or a part of the principal or distributions reduction or cancellation; conversion of all or a part of the AT1 into shares or other securities or other obligations of the Issuer; and amendment or alteration of terms and conditions of the AT1 by HKMA
Ranking: Subordinated to depositors, other unsubordinated creditors, creditors in respect of Tier 2 Capital Instruments and all other Subordinated Indebtedness of the Bank, equal to Parity Obligations and senior to Holders of Junior Obligations
Tax/Tax Deduction/Regulatory redemption: In whole, but not in part, the outstanding principal amount together with Distributions accrued. Subject to HKMA’s prior approval
UOP: Funding and GCP
JGCs and JBRs: China CITIC Bank Intl, CITIC CLSA Securities, Citi, ICBC Intl
JBRs: ANZ, BofAML, BOCOM HK Branch, CCB Intl, CNCB HK Capital, HSBC, Mizuho Securities