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China’s Finance Ministry sold $3 bln sovereign bonds in Hong Kong

The Chinese Finance Ministry issued $ 3 billion sovereign bonds and  5 billion yuan of dim sum bonds in upsized sales in Hong Kong on Thursday, at a time of heightened tensions with its largest trading partner and in the midst of a global markets selloff.

It’s the third US dollar-denominated sovereign bond sales since October 2004.

The ministry sold $1.5 billion 5-year bonds at 3.25 per cent, $1 billion 10-year bonds at 3.5 per cent and $500 million 30-year bonds at 4 per cent.

The cost was as cheap as some of America’s strongest companies, indicating foreign investors remain confident in China’s ability to repay debt, even though economic growth is slowing and the country is trying to keep a lid on corporate-debt levels.

The ministry said the bond issuance attracted more than $13 billion subscription from central banks, sovereign funds, investment banks, commercial banks, issuance companies, asset management companies among others.

On day earlier, the ministry sold 4.5 billion yuan  in dim sum bonds in Hong Kong, including 1.5 billion yuan in 5-year bonds with a yield of 3.8 per cent to institutional investors and 3 billion yuan in 2-year notes with a yield of 3.65 per cent, alongside a further 500 million yuan of debt to overseas central banks.The rates put the cost of the sale on par with MOF’s last auction in July, despite a more than 10 basis point rise in the yield on benchmark 10-year sovereign bonds in the onshore market over the past several months on the back of both tighter liquidity and rising Chinese consumer prices.