China Gets Big Euro Bond Orders After Strong U.S. Showing
(Bloomberg) -- China amassed orders for more than four times the euro sovereign bonds it’s selling in what’s become an annual trip to Europe’s debt market.
Investors bid for more than 17 billion euros ($19.6 billion) combined of the three, seven and 12-year notes that will price later on Wednesday, according to a person familiar with the matter, who isn’t authorized to speak publicly and asked not to be identified. The impressive demand matches that of its last European foray a year ago, despite concerns about the market fallout from China Evergrande Group’s debt troubles.
Pricing across the three tranches narrowed as follows:
|Tenor||Size||IPT (bps)||Final spread||Order books|
|3-year||EU1.5b||MS+20 area||MS flat|
|7-year||EU1.5b||MS+40 area||MS +20|
|12-year||EU1b||MS+65 area||MS +52|
Global investors have shown strong interest in China’s sovereign debt offerings. Robust demand for a dollar bond deal last month suggested international buyers haven’t lost their interest despite liquidity struggles in China’s property sector.
The government sold 4 billion euros of debt denominated in the currency in both 2019 and 2020, with last year’s deal including its first negative-yielding sovereign bond. In comparison, yields on China’s five and 10-year onshore government bonds are above 2.7%.
Weakness in China’s credit market has been spreading of late from lower-rated developers, though high-yield dollar bonds were rebounding Wednesday after declining in 13 of the prior 14 trading days.
China has been shortening the maturities of euro bonds being offered. The 2019 sale was made up of seven- through 20-year debt, while last year’s consisted of five-, 10- and 15-year issues.
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