This sovereign bond issuance was highly appraised by international investors. On the pricing day, four tranches was announced with initial price guidance of T3+50bps area, T5+60bps area, T10+75bps area and T30+110bps area, which attracted multiple orders from many high-profile international bond investors reaching a 4.7-times oversubscription size in orderbook. The final price for the 3-years tranche was tightened to T+25bps; the 5-years tranche was tightened to T+30bps; the 10-years tranche was tightened to T+50bps; and the 30-years tranche was tightened to T+80bps, realizing an average of negative 5-10bps new issuance premium across all tranches, setting the a new lowest yield record across all tranches for China USD sovereign bonds. There is a diversified group of investors who participated in the new issuance, where international organizations, central banks and regional monetary authorities, whom previously have actively invested, as well as large pension funds, commercial banks and corporates passionately participated. Meanwhile, the extensive geographical distribution and expanded investor coverage of the new issuance shows a global recognition to the distinct China sovereign bond.
The issuance is the first-time that China issued in Reg S and 144A dual-ruled foreign currency denominated sovereign bond since they resumed international bond issuance back in 2017, the first time covering the domestic qualified-institutional buyers in the United States, and the transaction with the most extensive geographical coverage across all the outstanding China bonds. The issuance symbolizes China’s willingness and determination to boost confidence in all-around and high-level Opening-Up to the global capital markets and has profound significance for further deepening of China’s integration into the international markets.
This new issuance improves China’s foreign treasury yield curve, and further benefits other Chinese issuers to benchmark their international bond financing levels in the future, deepening in the integration with the international market and cooperation with international investors, as well as, promoting the dynamics of “dual-circulation” development pattern amongst domestic and international market.
