(Bloomberg) — China, which recently unveiled plans to support its ailing economy, has received more than $40 billion of bids for its first dollar bond issuance since 2021.
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That’s 20-times the bonds on offer, and is one of the reasons why spreads tightened during the sale. The nation is expected to raise $2 billion from three- and five-year securities at one and three basis points, respectively, over US Treasuries, according to a person familiar with the matter. They were initially marketed at spreads of about 25 and 30 basis points.
While the bonds are available to investors globally, officials last week said they will be sold in Saudi Arabia, an unusual venue given that London, New York and Hong Kong are normally being picked for such transactions. But the choice comes after recent efforts to boost economic ties. Officials from both countries met earlier this year to discuss cooperation, and the warming relations can be seen in moves such as a doubling of investment in Saudi Arabia by China’s biggest steel producer.
“It is in line with two countries’ rising connections,” said Ting Meng, senior Asia credit strategist at Australia & New Zealand Banking Group. “The bond is in the same format as prior ones, but there could be more Middle East investors. The final pricing could be flat or even negative to US Treasuries,” she added.
According to an earlier bond-offering document seen by Bloomberg, the debt will trade on Nasdaq Dubai and be listed on the Hong Kong exchange.
China sold 2 billion euros ($2.1 billion) of notes in Paris in September, its first euro-denominated bond sale in three years. Last week, the Ministry of Finance announced a $1.4 trillion bailout program for debt-straddled local governments, though it stopped short of more stimulus to lift domestic demand.
Bank of China, Bank of Communications, Agricultural Bank of China, BofA Securities, China Construction Bank, China International Capital Corporation, Citigroup, Crédit Agricole CIB, Deutsche Bank, First Abu Dhabi Bank, Goldman Sachs (Asia) L.L.C., HSBC, ICBC, J.P. Morgan, Mizuho and Standard Chartered Bank are arranging the sale.
–With assistance from Helene Durand and Paul Cohen.
(Updates with demand in the first paragraph and pricing in the third paragraph.)
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