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China Targets U.S. Buyers with $6 Billion Dollar Debt Sale

Bloomberg News
·2 mins read

(Bloomberg) -- China drew bumper demand for a dollar bond sale amid growing uncertainties over the U.S. elections and tensions with Washington.

For a fourth straight fall, China brought a dollar debt offering with three-year, five-year, 10-year and 30-year maturities, according to people familiar with the matter who aren’t authorized to speak publicly. The nation pulled in more than $30 billion of investor bids, which includes $10.8 billion of joint lead-manager interest.

The country’s Ministry of Finance raised about $6 billion via the new deal. The shorter-dated bonds have lower premiums than during the final price guidance marketing phase of the nation’s last dollar bond sale in 2019.

The Ministry of Finance opened up its bond sale to a broad pool of U.S. investors for the first time, potentially diversifying its investor base and setting aside concerns of decoupling in credit markets.

The deal includes China’s debut issuance of 144A notes, as well as previously sold Regulation S senior bonds, allowing participation from a wider range of potential international investors compared to last year’s jumbo global offering of $6 billion dollar bonds and 4 billion euro notes ($4.7 billion).

“144A issuance shows that China is keen to promote its USD bonds globally, including to U.S. investors,” according to Chang Wei Liang, a macro strategist at DBS Bank Ltd. in Singapore. “China has taken a pragmatic approach to deepen and liberalize its financial markets, and this is likely to continue with or without political tensions with the U.S.”

Officials at the ministry weren’t available to comment.

The fresh sovereign debt sale this week comes as uncertainties ahead of the U.S. elections in November are beginning to weigh on investor sentiment. Issuing the notes in October helps avoid potentially less receptive market conditions, according to analysts.

China’s business-as-usual approach contrasts with rising concern about a decoupling between the world’s two largest economies. The Ministry of Finance said during its 2017 resumption of dollar-debt sales that it would help build a benchmark yield curve for Chinese issuers, which range from developers to local governments.

(Updates with pricing details.)

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