China's Ministry of Finance, on behalf of the central government, on Wednesday issued 4 billion U.S. dollars in sovereign bonds in the Hong Kong Special Administrative Region, drawing record-high demand from global investors, the ministry said Thursday.
The offering comprised 2 billion dollars each of 3-year and 5-year tranches, priced at yields of 3.646 percent and 3.787 percent, respectively.
Investor appetite far outpaced supply, with total subscriptions reaching 118.2 billion dollars, nearly 30 times the issuance size, marking the highest subscription volume for China's U.S. dollar-denominated sovereign bonds to date.
The 5-year tranche was particularly popular, with demand reaching 33 times oversubscribed.
The U.S. dollar sovereign bond issuance by China attracted a diverse investor base with broad geographical representation. Geographically, investors from Asia, Europe, the Middle East, and the Americas accounted for 53 percent, 25 percent, 16 percent and 6 percent, respectively.
By investor type, official institutions, banks and insurers, fund and asset managers, and dealers accounted for 42 percent, 24 percent, 32 percent and 2 percent, respectively.
"This year, global investors demonstrated very strong subscription interest, with participation reaching a record high. The bonds also showed very robust performance in the secondary market, providing global investors with a high-quality, highly liquid asset for allocation," said Samuel Fischer, Head of China Onshore Debt Capital Markets, Deutsche Bank.
Global investors' strong confidence in China's sovereign bonds stems from the Chinese economy's demonstrated resilience and dynamism.
Not long ago, China released proposals for formulating a new Five-Year Plan, outlining the top-level design and strategic blueprint for the country's development over the next five years. Market institutions see not only promising economic prospects in these proposals, but also new opportunities brought about by China's economic development.
"Over the next five years, we expect China to actively further expand voluntary opening up and share opportunities with countries worldwide for common development. The successful issuance of the U.S. dollar sovereign bonds reflects global market recognition of China's creditworthiness and its development prospects," said Liu Wei, deputy general manager of the Investment Banking Center, Corporate Finance and Investment Banking Department, Bank of China Head Office.
China issues 4 bln USD sovereign bonds in Hong Kong with record global demand
