Chinese banks are planning near-record bond sales this month to replenish capital levels weakened by a surge in cheap loans to struggling businesses and sliding earnings, reported Bloomberg.

Industrial & Commercial Bank of China (ICBC), the world’s largest lender, and three domestic competitors plan to sell a combined RMB 195 billion ($28.5 billion) of perpetual or tier-2 capital bonds in September, said Bloomberg source. Those issuances alone would amount to the second-highest monthly such borrowings ever in China.

Enlisted to ease the financial hardship of consumers and businesses hurt by the coronavirus pandemic, Chinese banks are under increasing stress. Authorities have called on them to forgo RMB 1.5 trillion in profit by providing cheap funding, deferring payments and increasing lending, eroding their capital buffers as they struggle with a record pile-up of nonperforming loans (NPLs).

“Banks need to make long-term preparations to stabilize their asset quality, hence comes the demand to replenish both tier-1 and tier-2 capital,” analysts led by Zhang Jiqiang at Huatai Securities Co. wrote in a report last month. “NPLs will probably continue to rise.”