U.S. buyers snapped up billions of dollars of China's sovereign bonds - shrugging off concerns over rising tensions between the two countries. Institutional market participants from around the world including the U.S. are making long-term bets on China's economic performance through its $6 billion sovereign debt offerings.
According to China's Ministry of Finance, the sovereign bonds were marketed directly to U.S.-based participants and were well received. Internationally, orders were 4.5 times oversubscribed - amounting to more than $27 billion.
U.S. institutional investors accounted for about 15% of the orders, sources with knowledge of the transactions said. This included orders for dollar-denominated bonds with three-, five-, 10- and 30-year maturities. For China's 30-year bonds, U.S. buyers accounted for about 47% of orders.
"The deal was launched in a favorable market window despite geopolitical uncertainty ahead. The market optimism added to a successful transaction, which already had gathered a lot of early investor interest," the head of Deutsche Bank's China onshore capital markets, Samuel Fischer, said.
The sale is the first marketed to international investors since China resumed issuing international debt in 2017 following a pause of more than 13 years. The sale is the fifth overall in the past four years.
Since 2017, China has raised around $31.7 billion through bond sales. The latest transaction was led by four-state-owned banks and nine international banks including Citigroup, Goldman Sachs, JPMorgan Chase, Bank of America and Standard Chartered.
The International Monetary Fund forecast China would likely be the only large economy to experience growth this year. The fund estimates the world economy will contract by 4.4% for 2020 as the pandemic disrupts economic activity. In a report, the fund expects China's gross domestic product to expand by 1.9% this year.
One of the first countries hit by the pandemic, China was also the first to recover from its economic effects. Economic data over the previous quarter has been positive. Data from the Ministry of Commerce says retail and restaurant sales rose 4.9% earlier this month following the "Golden Week" holiday.