US institutional investors shrugged off rising tensions between Washington and Beijing, making long-term bets on China in a US$6 billion global offering of sovereign debt on Wednesday.
It was the first time the Ministry of Finance marketed directly to US-based institutional investors since it resumed issuing international debt in 2017 after a 13-year hiatus. The order book was 4.5 times oversubscribed, attracting US$27 billion in total orders.
American institutional investors accounted for 15 per cent of the final order book of dollar-denominated bonds with three-year, five-year, 10-year and 30-year maturities, according to people familiar with the matter on Thursday. In the 30-year tranche, US investors accounted for 47 per cent of the final orders, said the people, who declined to be identified because they are not authorised to discuss the matter publicly.
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"The deal was launched in a favourable market window despite geopolitical uncertainty ahead," said Samuel Fischer, head of China onshore debt capital markets at Deutsche Bank. "The market optimism added to a successful transaction, which already had gathered a lot of early investor interest."
The international bond sale - China's fifth in four years - was led by four-state owned lenders and nine foreign banks, including BofA Securities, Citigroup, Deutsche Bank, Goldman Sachs, JPMorgan Chase and Standard Chartered.
The sale came a day after the International Monetary Fund said China was the only major economy forecast to grow this year as the global economy is expected to contract 4.4 per cent as a result of a slowdown spurred by the coronavirus pandemic. China's gross domestic product is expected to grow by 1.9 per cent this year, according to the IMF's World Economic Outlook report.
Another sign of optimism came during the "golden week" holiday this month as daily retail and restaurant sales rose 4.9 per cent compared with last year's seven-day holiday period, according to Ministry of Commerce data.
"With China's economy quickly recovering, the issuance offered an opportunity for China to showcase yet again its robust policymaking and exceptional macroeconomic performance," said Karby Leggett, global head of public sector and development organisations at Standard Chartered. "The final pricing and size of the order book underscore China's leading role in not only the financial markets but also the broader global economy."
It also marked the first time HSBC had been left off a debt sale since China resumed issuing international bonds in 2017.
An HSBC spokesman said on Tuesday that the bank continued to have a "good ongoing working relationship" with the Ministry of Finance and was "the leading foreign bank for G3 debt issuance" in the mainland. G3 refers to debt issued in US dollars, Japanese yen or euros.
The biggest of Hong Kong's currency-issuing banks, HSBC has increasingly found itself caught in the middle of US-China tensions, including over its public support of a controversial national security law for the city and its help to US prosecutors in an investigation into Chinese telecommunications giant Huawei Technologies.
Nationalistic tabloid the Global Times has said HSBC could be included on an "unreliable entities" list over the Huawei situation.
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