China will raise a record $6 billion through bond sale that saw massive demand

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  • China will raise a record $6 billion Tuesday through an offering of dollar bonds with maturities of three, five, 10, and 20 years, according to Bloomberg.
  • The bonds will be issued by China’s Ministry of Finance and the proceeds will be used for general government spending.
  • This marks the third year in a row of China issuing dollar debt in an attempt to develop an offshore market to tap funding, Bloomberg reported.
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China will raise a record $6 billion through a dollar-denominated bond offering Tuesday, according to Bloomberg, which cited people familiar with the matter.

The country’s Ministry of Finance issued bonds with maturities of three, five, 10, and 20 years. The proceeds are expected to be used for general government spending.

Here’s a breakdown of the sale, according to Bloomberg:

  • Three-year notes: $1.5 billion
  • Five-year notes: $2 billion
  • 10-year notes: $2 billion
  • 20-year notes: $500 million

Investors placed orders for around $20 billion worth of bonds, Bloomberg reported. The stronger-than-expected demand enabled China to lower the pricing of its shortest tranche by 25 basis points to 35 basis points above US Treasuries, Bloomberg found.

Tuesday’s sale marks the third year in a row of China issuing dollar debt in an effort to develop an offshore market for companies and local authorities to find capital, according to a report from Bloomberg. The offering was double the size of last year’s, and three times as big as 2017’s.

Last year’s sale saw weak demand from American investors due to the escalating US-China trade war, the report added. China’s dollar bond market is now worth more than $740 billion, according to Bloomberg data.

The country also sold euro-denominated bonds for the first time in 15 years earlier this month, Reuters reported.

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