China's sovereign bond sales in Luxembourg have drawn strong investor demand, with experts saying the response reflected confidence in China's economic strength and credit backing.
China's Ministry of Finance issued sovereign bonds totaling 5 billion euros (about 5.70 billion U.S. dollars) in Luxembourg on Thursday on behalf of the central government, marking the largest euro-denominated bond issuance by the ministry to date.
Since 2009, the Ministry of Finance has been issuing sovereign bonds overseas on a regular basis for 18 consecutive years including offshore RMB sovereign bonds, U.S. dollar sovereign bonds and euro sovereign bonds, with the sovereign bond issuance framework continuously improved.
Despite recent market volatility, the issuance was warmly received by the market, with international investors subscribing enthusiastically. Total subscriptions amounted to 24.8 billion euros, nearly five times the offering amount.
This fully demonstrates international investors' firm confidence in the Chinese market, according to experts.
"China's position as the world's second largest economy, combined with its substantial foreign exchange reserves and fiscal capacity, provides fundamental credit strengths that appeals to global institutional fixed income investors, [providing] diversification benefits for international portfolio managers. Chinese sovereign bonds provide geographic and currency diversification," said Olivier Belorgey, Deputy Chief Executive Officer and Chief Financial Officer of Credit Agricole Corporate and Investment Bank.
"China is the second largest bond market in the world, so quite an amazing and important market for financial markets. It's also very well connected to global financial markets and now we can see a lot of international investors want to get exposure to the development of China businesses," said Pierre Schoonbroodt, Deputy Chief Executive Officer and Chief Financial Officer of Luxembourg Stock Exchange.
"The continued high level of international recognition for China's euro-denominated sovereign bonds is in effect supported by the strong fundamentals of the Chinese economy. China is the world's second-largest economy, and its long-term positive economic trend remains unchanged, providing a solid guarantee for RMB assets and sovereign credit," said Liu Wei, Deputy General Manager of the Investment Banking Center under the Corporate Finance and Investment Banking Department at the Head Office of Bank of China.
China's sovereign bond sales in Luxembourg draw strong investor demand
