China sovereign bond sale attracts US$27 billion in global orders, embraced by US investors

Ministry of Finance raised US$6 billion in bond sale, which was 4.5 times oversubscribed, sources say

Offering is the fifth since China resumed international debt sales in 2017 following a 13-year hiatus

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Despite recent fraying ties, US institutional investors are among the biggest supporter of the 30-year tranche in China’s latest global bond offering. Photo: AFP

Published: 1:07pm, 15 Oct 2020Updated: 10:59pm, 15 Oct 2020

US institutional investors shrugged off rising tensions between Washington and Beijing, making long-term bets on China in a US$6 billion global offering of sovereign debt on Wednesday.

It was the first time the Ministry of Finance marketed directly to US-based institutional investors since it resumed issuing international debt in 2017 after a 13-year hiatus. The order book was 4.5 times oversubscribed, attracting US$27 billion in total orders.

American institutional investors accounted for 15 per cent of the final order book of dollar-denominated bonds with three-year, five-year, 10-year and 30-year maturities, according to people familiar with the matter on Thursday. In the 30-year tranche, US investors accounted for 47 per cent of the final orders, said the people, who declined to be identified because they are not authorised to discuss the matter publicly.

“The deal was launched in a favourable market window despite geopolitical uncertainty ahead,” said Samuel Fischer, head of China onshore debt capital markets at Deutsche Bank. “The market optimism added to a successful transaction, which already had gathered a lot of early investor interest.”

The international bond sale – China’s fifth in four years – was led by four-state owned lenders and nine foreign banks, including BofA Securities, Citigroup, Deutsche Bank, Goldman Sachs, JPMorgan Chase and Standard Chartered.

Including this week’s sale, the Chinese government has raised US$27 billion and 4 billion euros (US$4.7 billion) since it returned to the global bond market in November 2017.