China is venturing into the Saudi Arabian market for its first dollar-denominated bond sale since 2021, offering three-year and five-year securities with initial pricing guidance of approximately 25 and 30 basis points over the respective US Treasury yields. The Ministry of Finance had earlier announced plans to raise up to $2 billion through this issuance.
By Wednesday morning, the deal had already garnered more than $25.7 billion in orders, according to sources familiar with the matter, signaling strong investor demand. However, it is common for final order sizes to fluctuate as pricing terms evolve during the bond sale process.
While London, New York, and Hong Kong are traditionally the go-to venues for such transactions, the choice of Saudi Arabia as the location for this bond sale reflects growing economic ties between China and the Kingdom. The two countries have made significant strides in strengthening their bilateral relations, as evidenced by high-level meetings earlier this year and increasing Chinese investments in Saudi Arabia, including a major boost from China’s largest steel producer.
Ting Meng, a senior Asia credit strategist at Australia & New Zealand Banking Group, noted that the sale aligns with the broader trend of improving ties between China and Saudi Arabia. “This bond sale is consistent with the rising connections between the two nations,” she said. “While the structure of the bond is similar to previous issuances, it is likely to attract more Middle Eastern investors. The final pricing may even end up flat or slightly below US Treasury yields.”
According to an offering document seen by Bloomberg, the bonds will be traded on Nasdaq Dubai and listed on the Hong Kong Stock Exchange, reflecting China’s growing global bond market presence.
Earlier this year, China also tapped the European bond market, raising €2 billion ($2.1 billion) in Paris—its first euro-denominated bond issuance in three years.
In the wake of the bond sale, China has been actively pursuing measures to stabilize its economy. Just last week, the Ministry of Finance unveiled a $1.4 trillion bailout plan to assist debt-burdened local governments, though it stopped short of introducing further stimulus measures aimed at boosting domestic demand.
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