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China Sells $2 Billion in Dollar Bonds at Rates Slightly Above U.S. Treasury Yields

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10/26/2017 | 06:08pm CEST
By Manju Dalal and Carolyn Cui 

China Thursday sold $2 billion in U.S. dollar bonds at interest rates slightly above what the U.S. pays to borrow in the debt markets, a sign of investor confidence in the financial health of the world's second-largest economy.

A surge of investor demand for the country's first international debt sale in 13 years enabled China to price its 5-year bonds to yield 2.196%, or just 0.15 percentage point over comparable U.S. Treasury notes.

The country's 10-year bonds were priced to yield 2.687%, or 0.25 percentage point above Treasury yields.

The bond sale, which followed this week's conclusion of China's twice-a-decade Communist Party Congress, was carefully managed to achieve an outcome that would send a strong message about China to the global markets.

The $2 billion offering size was small by the standards of the U.S. and other major sovereign debt issuers. Coupled with China's long absence from the global capital markets, it created a scarcity value for the country's bonds. Many investors -- led by Chinese institutions with dollars to invest outside of the mainland -- were keen to own the securities, and they helped push down their yields.

Write to Carolyn Cui at [email protected]

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