China launches US$1.7b bond
The roadshow for the dual currency sovereign bond will begin on Friday
China will start marketing its new dual currency sovereign bond on Friday with the aim of raising the equivalent of about US$1.7 billion, the Ministry of Finance said in a statement.
The much anticipated offer will be split into US$500 million of dollar-denominated five-year notes and Euro1 billion (HK$9.58 billion) in euro-denominated 10-year notes.
Goldman Sachs, JP Morgan, Merrill Lynch and Morgan Stanley will be arranging the US dollar tranche, while the euro tranche will be brought to market by BNP Paribas, Deutsche Bank and UBS.
According to the ministry statement, the roadshow will start in Hong Kong on Friday and will move to Milan on Monday, Frankfurt and Paris on Tuesday and end in London on Wednesday.
There would also be a video conference call for Singapore investors on Friday, people familiar with the deal said.
The offering will not be marketed to onshore US investors.
The bonds are seen as an attempt by Beijing to establish new benchmarks for mainland firms looking to tap international debt markets. Demand is expected to be strong among investors looking for diversification, as the central government is a relatively rare issuer of international bonds, especially euro-denominated ones, analysts say.
The country also has a strong credit rating of A2/BBB-plus.
Despite recent volatility in US treasuries and a heavy US$5.5 billion in new Asian issuance last month, Asian credit spreads have remained tight as investors continue to search for yield.
Analysts at Calyon noted that most of last month's Asian bond offers were three to six times oversubscribed, reflecting 'high levels of global liquidity and the low returns available in US treasuries'.