(Yicai Global) Jan. 23 -- Ping An Bank, a  Chinese commercial bank, has issued the most popular convertible bonds  in China amid investors' growth expectations for the lender's stock  price. 

Ping An Bank issued a total of CNY26  billion (USD3.8 billion) convertible bonds, with about CNY18 billion for  main shareholders and private placements, as well as some CNY8 billion  for offline investors, the Shenzhen-based lender said in a statement.  The part of CNY8 billion worth of debt instruments got subscribed 1,400  times, rising up to CNY10.8 trillion (USD1.6 trillion), which is a  record in terms of Chinese stock markets.

"Bank convertible bonds are more secure  than those of ordinary industrial and commercial enterprises," an  employee from a lender in southern China told Yicai Global. "They are  scarce high-quality assets." The interbank market has sufficient  liquidity so once there are assets that can be held for a long time,  investors are strongly willing to subscribe, the employee added. 

"The interest rate of convertible bonds  is generally much lower than that of ordinary bonds," an institutional  investor told Yicai Global. The Zhangjiagang Rural Commercial Bank  issued CNY2.5 billion worth of convertible bonds in November last year  with only 0.4 percent first-year coupon rate. The rate of Ping An Bank's  convertible bonds is 0.2 percent. 

The biggest advantage of convertible  bonds is that investors can benefit from share price gains after  transferring them into stocks, the investor said. This is why  institutions that subscribe to these debt instruments show that they are  optimistic about the bank's future share price, the investor added. 

Lenders' low stock prices also add to  investors' growth expectations. After a generally lackluster year of  2018 for Chinese stocks, the nation's banking stock index rebounded  after falling to the lowest point of 8,112.02 in early January. It rose  by nearly 8 percent as of Jan. 21. Ping An Bank's [SZ:00001] share price  also gained by nearly 13 percent during the period.

Last year was slow for corporate  borrowers in China. Some of the four banks of the Bank of  Communications, Shanghai Pudong Development Bank, China CITIC Bank, and  Jiangsu Bank had to wait for nearly two years for government approvals  until all of them received one last December. Ping An Bank waited for 35  days and got its permit last March to issue bonds. These  five banks got an approval to issue CNY246 billion worth of bonds, some  CNY220 billion of which still await issuance and a sum of CNY120  billion is already in the works. 

Editor: Emmi Laine