Clifford Chance

Clifford Chance advises Bank of China on issuance of US$3 billion 144A Additional Tier 1 capital securities

Leading international law firm Clifford Chance advised the Bank of China (Hong Kong) Limited on the issuance of US$3 billion undated non-cumulative subordinated Additional Tier 1 capital securities under its recently updated US$15 billion medium term note programme and the tender offer to repurchase US$876 million of the US$2.5 billion 5.55% subordinated notes due 2020.

The Capital Securities are intended to qualify as Additional Tier 1 capital pursuant to the Banking (Capital) Rules (Cap. 155L) of Hong Kong and were offered under Rule 144A and Reg S to Qualified Institutional Buyers in the US and to investors outside of the US, respectively.

The offering of the Capital Securities is the largest 144A Additional Tier 1 deal globally since 2015 and the largest single tranche Additional Tier 1 deal globally in 2018 to date.

Connie Heng, Head of Capital Markets in Asia Pacific led on the deal and said, "We were delighted to assist Bank of China on this strategic issuance and tender offer. We hope the offering of the Capital Securities will reopen the offshore Additional Tier 1 market for other Chinese bank issuers."

Connie was supported by partners Alex Lloyd and Virginia Lee, consultant Mark Chan, associates Joshua Damm, Jeffery Hung, trainee solicitor Grace Fung and paralegal Michelle Leung.

Alex commented, "Bank of China saw an opportunity to take out some of their existing Tier 2 subordinated notes and they did so through an abbreviated tender offer so US holders could participate."

Clifford Chance has acted on key Hong Kong regulatory capital issuances since the Financial Institutions (Resolution) Ordinance became effective in 2017 including for Chiyu Bank, Chong Hing Bank, Shanghai Commercial Bank and Wing Lung Bank.