Beijing Set to Issue First Sovereign Dollar Bond in 13 Years


The Chinese government is on the verge of issuing its first dollar-denominated sovereign debt since 2004, as domestic investors become increasing dominant on the Asian-dollar bond market.

Bloomberg reports that China’s Ministry of Finance scheduled a meeting with bankers in Beijing to discuss the deal on Wednesday.

According to sources the deal is expected to be completed as early as the current month, while MOF has indicated in an official statement that it will issue a total of $2 billion in notes.

While China is host to the world’s third largest debt market, the offshore issuance will provide the Chinese government with a better assessment of the value of its state-owned enterprises that could reduce future borrowing costs.

China has recently emerged as a key driver of the Asian-dollar bond market due to the popularity of dollar securities with domestic investors. Goldman Sachs Asset Management expects China it to account for roughly 80% of the Asian market outside of Japan within the next several years.

Geoff Lewis, senior strategist for Asia at Manulife Asset Management in Hong Kong, said to Bloomberg Television that the issuance should prove popular despite the downgrading earlier this year of China’s sovereign-rating by both Moody’s and S&P Global Ratings.

“It will certainly have scarcity value and I imagine it will be snapped up pretty quickly,” said Lewis.

According to Lewis the deal demonstrates China’s “determination to move into the international financial markets,” as well as wield sway that is “commensurate with the size of its economy.”