What calculations are banks making in their concentrated redemption of preferred shares?

The concentrated redemption of bank preferred shares did not begin this year. In July 2025, Industrial Bank redeemed three tranches of preferred shares in a single transaction, totaling RMB 56 billion—the largest such redemption of the year. In December of the same year, five banks—Bank of Beijing (601169.SH), Bank of Shanghai (601229.SH), Hangzhou Bank (600926.SH), Nanjing Bank (601009.SH), and Changsha Bank (601577.SH)—announced redemptions in quick succession, amounting to RMB 45.8 billion collectively for the month. In 2026, the pace of redemptions accelerated further. Since the start of the year, major banks have successively redeemed and canceled their preferred shares: in February, Everbright Bank (601818.SH) redeemed RMB 35 billion worth of "Everbright Pref-3"; in March, Ping An Bank (000001.SZ) redeemed RMB 20 billion worth of "Pingan Pref-01"; in April, China Merchants Bank (600036.SH) redeemed RMB 27.5 billion worth of "CMB Pref-1"; in July, Bank of Beijing redeemed RMB 13 billion worth of "Beijing Bank Pref-2"; and in September, Nanjing Bank redeemed RMB 5 billion worth of "Nanjing Bank Pref-2." Adding the upcoming October redemption of CITIC Bank’s (601998.SH) "CITIC Pref-1," these six transactions total RMB 135.5 billion. Overall, the redemption of bank preferred shares has evolved from an isolated phenomenon into an industry-wide trend. Huayuan Securities forecasts that the total volume of bank preferred share redemptions in 2026 will reach RMB 150–200 billion—further growth over 2025—and that the "redemption wave" will remain at its peak. As more early-issued preferred shares enter their redemption periods, the outstanding stock of preferred shares is likely to continue shrinking. II. Recalculating Costs Amid Low Interest Rates The substantial interest-rate spread between high-yield preferred shares and the current low-rate environment is the most direct and fundamental driver behind this "redemption wave." Preferred shares issued between 2014 and 2017 typically carried coupon dividend rates of 5%–6.5%; even after rate resets, many still maintain relatively high rates of 3.50%–4.50%. By contrast, as of the first half of 2026, newly issued perpetual bonds and Tier-2 capital bonds (collectively known as "perpetual-and-Tier-2 bonds" or "Er-Yong bonds") by banks have seen coupon rates fall broadly below 3%, with state-owned and joint-stock banks averaging just 1.99%—some even as low as 1.88%. Take China Merchants Bank’s "CMB Pref-1," for example: its original dividend rate was 4.81%, significantly higher than the 2.43% average coupon rate for bank perpetual bonds in 2025. Redeeming it allows the bank to cut annual mandatory dividend payments by approximately RMB 1.323 billion, directly boosting net profit. Against the backdrop of persistently narrowing net interest margins, the economic rationale for "redeeming old instruments and issuing new ones" becomes especially compelling. Beyond explicit interest costs, differences in tax treatment further amplify the cost advantage of perpetual bonds relative to preferred shares. Dividends on preferred shares are not tax-deductible before tax, whereas interest on perpetual bonds qualifies as a pre-tax expense—resulting in lower effective after-tax financing costs. Moreover, although preferred shares count as Additional Tier-1 capital and satisfy regulatory requirements, their high fixed dividends exert continuous pressure on bank profitability—particularly when asset-side yields decline—further eroding profits. Thus, redemption is not merely a financial decision but also a key measure for banks to enhance return on equity (ROE) and improve returns to common shareholders.

Another 'billion-dollar real estate developer' defaults on commercial paper—did it sell off its 'future' to repay debt?

Another 'billion-dollar real estate developer' has defaulted on commercial paper—a $12.574 million note matured without repayment. On July 29, Zhongliang Holdings (2772.HK) issued an inside announcement stating that its 9.5% senior notes due in July 2022 would constitute a default event. Per the terms of the July 2022 notes, all outstanding principal and accrued but unpaid interest were due and payable on July 29. As of now, Zhongliang Holdings has failed to pay the remaining outstanding principal of $12.574 million plus accrued interest, thereby triggering a default event under the July 2022 notes. Zhongliang Holdings stated it will continue communicating with holders of the outstanding July 2022 notes and encourage them to contact the company as soon as practicable to seek mutually agreeable arrangements. According to Qiyu Enterprise Early Warning Platform, Zhongliang Holdings currently has three outstanding U.S. dollar-denominated bonds, with a total outstanding amount of $829 million—including two bonds maturing within one year. Zhongliang Holdings further clarified that this situation will not trigger defaults on the following obligations: its outstanding 12.0% senior notes due in April 2023; its outstanding 8.75% senior notes due in April 2023; and its outstanding 9.75% senior notes due in December 2023. The Board of Directors of Zhongliang Holdings believes this incident will not have any material adverse impact on the Group’s business operations. Additionally, because the July 2022 notes mature on July 29, 2022, they will be delisted from the Hong Kong Stock Exchange on that date. Previously sought extensions on multiple bond maturities Facing imminent debt maturities, Zhongliang Holdings previously attempted to extend several U.S. dollar-denominated bonds. On April 28, Zhongliang Holdings announced plans to extend three U.S. dollar bonds, with a combined principal amount of $900 million. Specifically, it proposed exchange offers for: (i) an 8.5% bond due May 19, with a total principal of $300 million and outstanding balance of $289 million; and (ii) a 9.5% bond due July 29, with a total principal of $450 million and outstanding balance of $439 million. The new bonds would carry coupon rates increased by 0.25 percentage points, with maturity dates set for April 15, 2023 and December 31, 2023, respectively. The exchange offer period for these two bonds ran from April 28 to May 10, requiring approval from holders representing at least 90% of the outstanding principal to proceed. Twenty days later, on May 18, Zhongliang Holdings announced completion of exchange offers for its $262 million notes due May 2022 and its $368 million notes due July 2022, replacing them with new notes of $201 million due April 2023 and $429 million due December 2023, respectively. This indicates that some holders of the aforementioned two U.S. dollar bonds declined to participate in the exchange offers. After completing the exchanges, Zhongliang Holdings still had $27 million and $71 million of unpaid principal outstanding on its May 2022 and July 2022 notes, respectively.

Calumet Issues Redemption Notice for $150 Million of 9.75% Senior Notes due 2028

Oct 15, 2026

Calumet Specialty Products Partners announced a redemption notice for $150 million of its 9.75% Senior Notes due 2028, contributing to $265 million in total debt reduction since July 2026. The company expects annual cash interest savings of $26 million, strengthening its balance sheet.

PR Newswire

2026-03-30

Adams Asset Advisors LLC Holds $102.46M Stake in Calumet, Inc.

2026-03-30

Calumet (NASDAQ:CLMT) Given New $60.00 Price Target at HC Wainwright

2026-03-31

H.C. Wainwright Raises Calumet Stock Price Target to $60 from $33

2026-04-02

Calumet (NASDAQ:CLMT) Director Daniel Sajkowski Sells 3,310 Shares

2026-04-05

Calumet, Inc. Receives Consensus 'Hold' Rating from Brokerages