China attracts global demand in US$4.9 billion bond offerings as investors prepare for wider access, index inclusion
- China completed a US$4 billion global bond offering on Tuesday with overwhelming demand
- The government also auctioned 6 billion yuan of bonds in Hong Kong as sovereign debt enters FTSE WGBI index family from next month
China’s sovereign bond offering in Hong Kong garnered strong demand from investors, following efforts to widen ownership access to global funds. The government also concluded a US$4 billion of foreign-currency bond sale to solid demand.
The government auctioned 6 billion yuan (US$938.7 million) worth of notes on Wednesday in the second batch of its annual sale programme to spur the city’s debt market. They attracted 13.3 billion yuan of buying orders, the Hong Kong Monetary Authority said in a statement.
It sold 4.5 billion yuan of two-year notes paying 2.4 per cent interest annually and 1.5 billion yuan of 15-year bonds with a 3.6 per cent coupon.
The latest sale comes as major global index provider FTSE Russell prepares to add Chinese sovereign bonds to its family of World Government Bond Index next month, a move that could lure as much as US$150 billion of inflows as China becomes a magnet for funds betting on the country’s growing economic influence.
“There has been huge demand for China bonds for diversification due to low correlation with other key bond markets and for return enhancement purposes,” said Sally Wong, chief executive of Hong Kong Investment Fund Association. “With the inclusion of China bonds into key international indices, the inflows will only continue to increase.”
The sale in Hong Kong also preceded a proposal by the city’s pension regulator overseeing the HK$1.17 trillion (US$150.5 billion) Mandatory Provident Fund to include investment-grade government bonds among eligible investment options for its 4.5 million scheme members going forward.