Quick sell-out expected for Beijing’s first dollar bonds since 2004
The issue – the first of its kind in 13 years – will be a symbol of China’s financial strength after it received two credit downgrades in six months
Investors will snap up China’s US dollar-denominated sovereign bonds, analysts predict.
The US$2 billion expected to be raised by China’s first sale of dollar bonds in 13 years is a mere drop in the bucket for Beijing and its US$3.1 trillion in foreign exchange reserves. But the issue itself symbolises China’s financial and economic strength after two agencies lowered the country’s sovereign rating in the past six months, according to analysts.
“The bonds will be sold out in an hour,” said Hong Hao, research head at Bocom International, an investment banking and brokerage arm of Bank of Communications in Hong Kong.
“The amount is not huge and the issue is symbolic as there is need for China to build up offshore sovereign bond market and to diversify its debt structure.”
Chen Long, an analyst with Bank of Dongguan, also expected to see strong demand for the bond issue.
“The bonds will be subscribed very quickly given that the US$2 billion is not a big amount and there are many Chinese financial institutions in the Hong Kong market. It is unlikely to be undersubscribed,” he said.