Published: 11:27am, 6 Nov 2024Updated: 11:40am, 6 Nov 2024
The planned issuance of US dollar bonds in Saudi Arabia by China’s Ministry of Finance is a “practical” move by Beijing to establish fundraising channels offshore and strengthen bilateral ties with a strategic partner, analysts said.
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The ministry will sell up to US$2 billion of notes in Riyadh next week, according to a statement posted on its website on Monday.
“China doesn’t need to issue offshore bonds to raise money because the cost of issuing onshore bonds is lower,” said Raymond Yeung, the chief Greater China economist at ANZ Bank.
“This is a practical move to increase offshore bonds’ liquidity and provide regular supply to global investors related to the Belt and Road Initiative.”
The last time the Ministry of Finance issued US dollar-denominated sovereign bonds was in 2021, when it issued US$4 billion worth in Hong Kong.
The fact that it’s a dollar bond is a reminder that the two of them are a long way from ditching the dollar.
Mark Williams, chief Asia economist at Capital Economics, said that Beijing’s choice of Riyadh reflects China’s efforts to build up the bilateral relationship and dislodge the US as Saudi Arabia’s key geopolitical partner.