China raises $6 billion as U.S. investors look past political tensions

[October 15, 2020]  By Scott Murdoch

HONG KONG (Reuters) - China has raised $6 billion in a dollar bond issue that was offered to U.S. investors for the first time just weeks before the Nov. 3 election, a term-sheet reviewed by Reuters showed.

The deal, the fifth foreign currency denominated bond since China reinstated its offshore debt sales programme in 2017, attracted $27.2 billion in orders, the term-sheet showed.

China has issued four dollar bonds and one euro bond in the past three years.

The debt was priced at 25 basis points above U.S. Treasuries for the $1.25 billion three-year tranche, 30 basis points for the $2.25 billion 5-year tranche, 50 basis points for the $2 billion 10-year tranche and 80 basis points for the $500 million 30-year tranche, the term-sheet showed.

"The successful issuance of the U.S. sovereign bonds has helped establish and improve a yield benchmark of more market significance for Chinese issuers," China's finance ministry said in a statement.

It was the first time China has offered debt to U.S.-based investors who were most active in the longer-dated tranches of the transaction.

U.S investors, primarily fund managers, were the largest buyers of the 30-year tranche, picking up 47% of the $500 million sold, according to the term-sheet.

The rising tensions between Washington and Beijing did not deter U.S.-based investors from participating in the deal, according to one person with direct knowledge of the matter.

The person could not be named because he was not authorised to speak to media.

"We did not see the geopolitical situation scaring people away," he said.

The deal was finalised on Wednesday as the stand-off between Washington and Beijing showed no signs of easing.

The U.S. State Department has submitted a proposal for the Trump administration to add China’s Ant Group to a trade blacklist, according to two people familiar with the matter, before the financial technology firm is slated to go public in Shanghai and Hong Kong.

(Reporting by Scott Murdoch in Hong Kong; Additional reporting by Tom Arnold in London and the Beijing newsroom ; Editing by Jacqueline Wong, Toby Chopra and Tomasz Janowski)

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