China raises $6bn in dollar bond issue with buyers looking beyond political tensions
This is the fifth foreign-currency denominated bond since China reinstated its offshore debt sales programme in 2017
Hong Kong — China has raised $6bn in a dollar bond issue that was offered to US investors for the first time just weeks before the November 3 election, a term-sheet reviewed by Reuters showed.
The deal, the fifth foreign-currency denominated bond since China reinstated its offshore debt sales programme in 2017, attracted $27bn in orders.
China has issued four dollar bonds and one euro bond in the past three years.
The debt was priced at 25 basis points (bps) above US treasuries for the $1.25bn three-year tranche; 30bps for the $2.25bn five-year tranche; 50bps for the $2bn 10-year tranche; and 80bps for the $500m 30-year tranche, the term-sheet showed.
“The successful issuance of the US sovereign bonds has helped establish and improve a yield benchmark of more market significance for Chinese issuers,” China’s finance ministry said in a statement. It was the first time China has offered debt to US-based investors who were most active in the longer-dated tranches of the transaction.
US investors, primarily fund managers, were the largest buyers of the 30-year tranche, picking up 47% of the $500m sold, according to the term-sheet.
The rising tensions between Washington and Beijing did not deter US-based investors from participating in the deal, according to one person with direct knowledge of the matter.
The person could not be named because he was not authorised to speak to media. “We did not see the geopolitical situation scaring people away,” he said.
The deal was finalised on Wednesday as the stand-off between Washington and Beijing shows no signs of easing.
The US state department has submitted a proposal for the Trump administration to add China’s Ant Group to a trade blacklist, according to two people familiar with the matter, before the financial technology firm is slated to go public in Shanghai and Hong Kong.
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