China makes massive sovereign bond offering

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China has priced a US$6 billion bond, the largest US dollar-denominated sovereign bond offering by the government to date.

The issuance attracted an order book of nearly 3.6 times the issue size from international investors. China’s central government also priced RMB5 billion (US$720 million) bonds in Hong Kong subsequently.

The US dollar-denominated bonds comprise four series: US$1.5 billion three-year bonds (yield: 1.929%); US$2 billion five-year bonds (yield: 1.996%); US$2.0 billion 10-year bonds (yield: 2.238%); and US$500 million 20-year bonds (yield: 2.881%), all of which target institutional investors.

The issuance is expected to help improve the yield curve of the US dollar-denominated sovereign bonds of the central government, as well as provide a benchmark for US dollar financing by Chinese enterprises.

The issuance of the RMB-denominated bonds comprises RMB3.5 billion two-year bonds and RMB1.5 billion five-year bonds, making the total issue size of RMB-denominated bonds in Hong Kong RMB15 billion this year.

Linklaters has been the international legal adviser to the China’s Ministry of Finance since 2009, providing legal services on all its sovereign offerings targeting international investors.

The Linklaters team was led by partner William Liu, with support from associate Allen Zhang.