China’s €4 billion (US$4.6 billion) euro-denominated bond sale has drawn record demand, highlighting robust investor confidence in its sovereign assets amid a global shift towards diversification.
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International and regional investors placed €100.1 billion in orders for the offering – 25 times the fundraising target – China’s Ministry of Finance said in a statement on Wednesday. The seven-year tranche, issued alongside an equal-sized four-year tranche, attracted demand 26.5 times its allocation, it added.
The subscription rates marked the highest for a euro-denominated bond offering by China, which had previously conducted four such issuances, according to industry players. Investors from Europe, Asia, the Middle East and offshore US accounted for 51 per cent, 35 per cent, 8 per cent and 6 per cent of allocations, respectively.
The latest issuance – which followed another oversubscribed US dollar notes sale of US$4 billion by the Ministry of Finance two weeks ago – signalled growing investor confidence in China’s assets as trade tensions with the US ease and the country’s low correlation to global markets becomes more attractive.
“Investors have voted their confidence in the creditworthiness of the Chinese government, given the diverse investor type and robust subscription rate we have seen,” said Keith Cheung, head of debt syndicate for Greater China and North Asia at Standard Chartered, the joint lead manager, joint bookrunner and settlement bank of the deal.
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Sovereign entities subscribed 26 per cent of the latest euro bond issuance, while asset and fund managers accounted for 39 per cent, and banks and insurers took 32 per cent, according to the Ministry of Finance.