New central bank rule may hurt offshore AT1 volumes

High Yields Bonds
By Addison Gong
08 Mar 2018

The People’s Bank of China’s first update on bank capital regulations in more than a decade has explicitly given the nod to principal write downs, giving banks more options when it comes to switching between the offshore and onshore markets. Addison Gong reports.

The PBoC will encourage financial institutions to issue new types of bonds with innovative loss absorption mechanisms to supplement their capital, and explore issuance that expands their total loss-absorbing capital (TLAC), the central bank said, in a note in late February.

The PBoC’s reference to TLAC signalled that ...

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