China has launched the marketing of sovereign bonds worth up to $5.7 billion, in what could be its largest such transaction in euros to date.
According to a source close to the matter, the Chinese Ministry of Finance set the initial price of five-, eight- and twelve-year euro bonds at 15, 22 and 33 basis points above the reference interest rate (mid-swap rate), respectively. The source added that pricing of these securities could occur as early as Thursday.
China usually taps the euro debt market only once a year, but this time it will do so earlier than usual, just seven months after its $4.6 billion bond issue in November attracted record demand exceeding $113 billion. In previous years, the world’s second-largest economy typically priced euro securities between September and November, with the exception of its debut in May 2001, according to data compiled by Bloomberg.
“China is taking advantage of a favorable opportunity,” he said. Lei Zhuhead of Asian fixed income at Fidelity International. He added that he is in a good position in the face of possible inflationary pressure and the possible tightening of the European Central Bank’s monetary policy in the second half of the year.
This sale represents a new test of global investor interest at a time when the European Union is stepping up efforts to address the growing trade imbalance with China, while avoiding triggering a new trade war. The bloc was China’s second-largest export market last year.
