Overwhelming response sees both tranches oversubscribed by US$500m ahead of the book close Investors flocked to China's first global bond sale in more than two years, making the US$1.5 billion offer well oversubscribed before the book close tomorrow. As of yesterday, the order book of the 10-year US dollar tranche was estimated at US$1.5 billion, or $500 million oversubscribed. The five-year euro tranche also drew a strong reception, with the market speculating that about $1 billion was attracted to the tranche, or $500 million oversubscribed. Sources said overseas offshoots of mainland state banks were also subscribing to the offer. Despite the overwhelming response, sources close to the book-runners said the size was unlikely to be increased. Pricing would be set tomorrow New York time, they said. Pricing for the 2013 bond is equivalent to 55 basis points above comparable US treasuries, or Libor (London interbank offered rate) plus 13 basis points, they said. The 2013 bond seems to offer a more generous return than the 10-year tenor bond issued two years ago, according to a fixed income portfolio manager. The 2011 bond was traded at a price equivalent to Libor plus two basis points in the secondary market yesterday. The euro tranche is to be priced at 10 basis points above Euribor, (or Euro interbank offered rate), or the Euro Mid Swap. Yesterday, the swap rate was 3.74 per cent. 'Pricing is good,' Arthur Lau, an analyst with ratings agency Fitch, said yesterday. 'The spread of 55 basis points is at the low end of all A-rated sovereign issues which command spreads of 50 to 70 basis points above comparable treasuries.' Sources said the offer's fair pricing, China's good credit-risk - its bond rating was just upgraded one notch by Moody's Investors Service to A2 - and the scarcity of the bonds on offer were contributing to the brisk sale. 'This sovereign debt is considered as a good benchmark for portfolio managers wishing to gain exposure to China debt in their portfolios,' the portfolio manager said. Owing to the rarity of China debt products in the international market and optimism about the Chinese economy, the bond was expected to trade with a tighter spread in the secondary market, the fund manager said. Given the robust demand, he said the order book would go higher, prompting the issuer to tighten the initial spread. He is expecting a range of five basis points of the narrowing for the US dollar and euro tranches. The bond will be dually listed on the Luxemburg and Hong Kong exchanges.