What happened
Bank of China announced it completed the issuance of its second tranche of total loss-absorbing capacity (TLAC) non-capital bonds on September 7, 2026, in the interbank bond market.
The issuance totaled 40 billion yuan, split into two tranches: a 4-year fixed-rate bond worth 20 billion yuan with a coupon of 1.69% and a conditional redemption right at the end of year 3, and a 6-year fixed-rate bond worth 20 billion yuan with a coupon of 1.79% and a conditional redemption right at the end of year 5.
Proceeds, after deducting issuance costs, will be used to enhance the bank's total loss-absorbing capacity, subject to applicable laws and regulatory approvals.
Why it matters
This issuance is part of Bank of China's efforts to meet regulatory requirements for total loss-absorbing capacity, which are designed to ensure that large banks have sufficient buffers to absorb losses without relying on taxpayer bailouts.
The bond structure, with conditional redemption options, offers flexibility to the bank while providing investors with fixed-income instruments tied to the bank's creditworthiness.
Key facts
Issuance date: September 7, 2026.
Total size: 40 billion yuan.
Two tranches: 4-year at 1.69% and 6-year at 1.79%, each 20 billion yuan.
Proceeds to be used for enhancing total loss-absorbing capacity.
What to watch next
Investors may monitor how Bank of China allocates the funds and whether it will issue further TLAC instruments to meet future regulatory thresholds.
Market reaction to the bond pricing could signal demand for TLAC debt from Chinese banks.