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$6 Billion Bond Sale In China - US Investors Are Welcome

Bond Sale China
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EDITOR NOTE: China may be looking to significantly reduce its US Treasury holdings, but they’re also, for the first time, welcoming private US investment, offering $6 billion of its sovereign bonds. It’s a sign that tables are turning, at least in China’s view. What’s critical to watch is whether the rest of the world also acknowledges the dawning of China’s global leadership as America’s position slowly fades.

China is set to raise around $6 billion (4.6 billion pounds) through an international sovereign bond sale this week in which it will allow U.S.-based institutional investors to participate for the first time, four people with direct knowledge of the matter told Reuters.

The Ministry of Finance has mandated 13 banks for the proposed multi-tranche Reg S and 144A offering, showed a mandate announcement seen by Reuters.

Reg S bonds may not be offered, sold or delivered within the United States, whereas 144A offerings are U.S. private placements for U.S. investors. China’s previous international sovereign bond sales have all been Reg S offerings.

“It’s a sign that China is continuing to want to expand its investor base,” said one of the people, referring to the U.S. offering.

While the size of the deal was not disclosed, the four sources said it would likely be around $6 billion, in line with China’s last bond sale.

The bonds will likely be sold in three, five, 10 and 30 year tranches, two of the people said. The final deal size and pricing is set for Wednesday, they said.

One of the people said the deal had seen strong feedback on Tuesday.

“Despite the U.S.-China noise, it doesn’t seem that U.S. investors care all that much,” the person said.

The people declined to be identified as they were not authorised to speak with media on the matter.

Fitch Ratings on Tuesday said it had assigned A+/Stable ratings to China’s proposed U.S. dollar bonds.

Originally posted on Reuters

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