China Bank’s Bond Drama Flags Worries for $476 Billion Market

A Chinese commercial bank’s reversal on whether to call a note flags early-redemption uncertainties in the country’s $476 billion Tier 2 capital bond market.

The flip adds to similar concerns that sparked a rout among Asian financial firms’ perpetual dollar bonds late last year.

Bank of Jiujiang Co. now plans to exercise the call option of a 1.5 billion yuan ($221 million) note, it said in a one-sentence statement posted on its website late Friday that reversed a day-earlier announcement the bond wouldn’t be redeemed.

Tier 2 bonds are a key channel for Chinese lenders to maintain capital-sufficiency ...