Ministry of Finance’s 4b eurobonds in HK set to attract global investors
Published: Nov 01, 2021 09:43 PM
Aerial photo taken on June 25, 2020 shows people displaying China's national flag in Tamar Park in Hong Kong, China. (Photo: Xinhua)

Aerial photo taken on June 25, 2020 shows people displaying China's national flag in Tamar Park in Hong Kong, China. (Photo: Xinhua)

The Ministry of Finance is poised to issue 4 billion euros ($4.63 billion) worth of sovereign bonds in the Hong Kong market next week, the third issuance since the sale of eurobonds was resumed in 2019, which is expected to draw widespread interests from EU and international investors.

The offering on November 10 will have three tranches - three-, seven- and 12-year bonds, according to the ministry. More details are expected before the offering.

The issuance, the third of its kind since China restarted the sale of euro-denominated sovereign bonds, comes on the heels of the ministry's sale of $4 billion worth of US dollar-denominated sovereign bonds in Hong Kong on October 19.

The ongoing foreign currency-denominated bond issues in the offshore market, amid the still-raging COVID-19 pandemic and reduced momentum of the global economic recovery, improves the country's connectivity with global financial markets and highlights China's resolve to push for higher-level opening-up and international investors' optimism about the Chinese economy, the Shanghai Securities Journal reported Monday, citing Ye Yindan, an analyst at Bank of China.

The Chinese economy recorded an expansion of 9.8 percent in the first three quarters of the year, with industrial production and consumption both maintaining double-digit growth rates, official data showed. 

By comparison, the IMF ratcheted down its global growth forecast for this year to 5.9 percent from 6 percent previously due to the Delta variant and supply chain bottleneck concerns, according to the fund's latest estimates in October.

The eurobond issuance would certainly be appealing to investors, Ye said. 

In November 2020, the Finance Ministry's bond sale of 4 billion euros was 4.5 times oversubscribed by international investors, including central banks, sovereign funds, pension funds and banks. European investors' eventual commitments made up 72 percent of the total.

The previous year's bond offering, with maturities of five, 10 and 15 years, ended with the five-year tranche achieving a negative yield for the first time. 

China's bond market, worth more than 100 trillion yuan, is the world's second-largest and is headed for even greater openness. In a fresh sign, the southbound leg of the bond connect between the Chinese mainland and Hong Kong markets was officially up and running in late September. 

Global Times