Zhong Guo Zheng Quan Bao·2025-08-08 07:31Core Viewpoint - The issuance of TLAC non-capital bonds by Industrial and Commercial Bank of China (ICBC) marks a significant development in China's banking sector, enhancing capital adequacy and risk resilience for major commercial banks [1][4]. Group 1: TLAC Non-Capital Bonds Issuance - ICBC announced the issuance of TLAC non-capital bonds from May 15 to May 17, with a basic issuance scale of 30 billion yuan, making it the first TLAC non-capital bond in China [1][2]. - The bonds consist of two types: a 4-year fixed-rate bond with a scale of 20 billion yuan and a 6-year fixed-rate bond with a scale of 10 billion yuan, both with conditional redemption rights [2][3]. - The issuance is part of a broader trend among China's Global Systemically Important Banks (G-SIBs) to meet TLAC requirements as the deadline approaches [2][5]. Group 2: Characteristics and Market Impact - TLAC non-capital bonds are designed to absorb losses and are not classified as bank capital, providing a new investment opportunity in the market [3][4]. - These bonds are expected to have higher investment returns compared to traditional financial bonds due to their loss-absorption features, which add a risk premium to their pricing [3][6]. - The regulatory framework for TLAC in China aligns with international standards, requiring G-SIBs to maintain specific TLAC ratios starting in 2025 [4][6]. Group 3: Future Supply and Market Conditions - The total planned issuance of TLAC non-capital bonds by major banks in China is projected to reach up to 440 billion yuan, with individual banks planning significant issuances [5][6]. - Analysts suggest that the pressure to meet TLAC requirements for G-SIBs is manageable, indicating a limited supply of TLAC bonds in the current year [6].