China issues bonds for the first time in three years

Wed, 11/13/2024

by Ellie LeTu

Source: Financial Times

• China borrows almost as cheaply as the US

  • $2B of Chinese bonds were sold at just 0.01% higher yield than US treasury bonds.

  • Tightest spreads on any Chinese issuance in the past 30 years.

  • Yields fell around 0.25 basis points below US borrowing costs.

• China claims the sale was a huge success

  • Investors placed $40B of orders to buy $2B of bonds.

    • The issuance was 20x oversubscribed.

    • For comparison, South Africa’s issuance this week was 2.5x oversubscribed.

  • A sign of China’s economic strength and “confidence in China’s credit” says their government.

• Some doubts remain

  • $2B is not a very large issuance.

  • More symbolic, as most of the issuance still happens in Hong Kong.

  • The US remains the global standard for safety and trust in debt.