Xin Hua Cai Jing·2025-06-23 13:57Core Viewpoint - Agricultural Bank of China has announced the issuance of the first phase of total loss-absorbing capacity (TLAC) non-capital bonds for 2024, aiming to enhance the issuer's total loss-absorbing capacity, marking the first issuance of TLAC non-capital bonds by the four major state-owned banks this year after meeting the first phase of TLAC requirements earlier in the year [2] Group 1: TLAC Bond Issuance Details - The basic issuance scale of this bond is set at RMB 20 billion, with specific categories: Category One at RMB 15 billion, Category Two at RMB 3 billion, and Category Three at RMB 2 billion [3] - Category One is a 4-year fixed-rate bond with a conditional issuer redemption right at the end of the third year; Category Two is a 6-year fixed-rate bond, and Category Three is an 11-year fixed-rate bond, both with conditional redemption rights at the end of the year prior to maturity [6] Group 2: Market Performance and Investor Insights - TLAC bonds have shown active trading performance in the secondary market since their issuance last year, with a trading turnover rate exceeding 30% in 2024, while the turnover rate for capital bonds from state-owned banks remains below 25% [6] - TLAC bonds are viewed as a significant means of liability supplementation due to their low cost and flexible terms, especially in the context of increasing deposit outflows and pressure on interest margins [6] Group 3: Future Issuance Potential - In 2024, the five major state-owned banks in China have collectively issued TLAC bonds totaling RMB 230 billion, with individual issuances as follows: Industrial and Commercial Bank of China (ICBC) at RMB 40 billion, Agricultural Bank of China at RMB 50 billion, Bank of China at RMB 40 billion, China Construction Bank at RMB 50 billion, and Bank of Communications at RMB 30 billion [7] - Future issuance potential for TLAC bonds is significant, with estimates suggesting a net increase of RMB 5.15 trillion in capital bonds/TLAC bonds needed from 2025 to 2027 to meet regulatory requirements, averaging RMB 1.72 trillion annually [7] Group 4: Regulatory Compliance Outlook - Fitch Ratings indicates that some of the five global systemically important banks (G-SIBs) in China are currently able to statically meet the next phase of TLAC requirements, while others are expected to achieve compliance after receiving capital injections from the Ministry of Finance [8] - The timeline for the four major banks to meet the second phase of TLAC requirements by 2028 and for Bank of Communications by 2027 suggests that there may be changes in compliance status in the future [8]