China Lifts Foreign Investment Limit in Stock, Bond Markets Description video: Sep.10 — China is easing restrictions for foreign investment into its capital markets nearly 20 years after it first allowed access. Bloomberg’s Michael McKee reports on \”Bloomberg Daybreak: Americas.\” […]
China Lifts Foreign Investment Limit in Stock, Bond Markets
Sep.10 — China is easing restrictions for foreign investment into its capital markets nearly 20 years after it first allowed access. Bloomberg’s Michael McKee reports on \”Bloomberg Daybreak: Americas.\”
China Raises $ 6 Billion Through Bonds
China raised $ 6 billion on Tuesday in the largest international sovereign bond offering in history as it faced a sharp drop in borrowing costs this year.
The Ministry of Finance has placed the bonds in four tranches. The three-year issue sold at 35 basis points above the benchmark for US Treasuries, a source at an investment bank told Reuters. According to him, 5-year bonds were sold by 40 bp. higher Treasuries, 10-year-olds – by 50 bp. higher Treasuries, and the 20-year tranche – by 70 bp. above Treasuries.
The deal came after a market rally this year that caused a sharp decline in global bond yields, which significantly lowered funding costs.
The total of $ 6 billion was roughly double the initial demand for bonds, according to IFR Refinitiv’s Capital Markets Information Service..
China’s finance ministry has indicated that the move will help improve the bond’s yield curve. it «will provide a price benchmark for Chinese enterprises issuing USD bonds», said in a message from the Bank of China posted on its website on Tuesday.
Earlier this month, China also floated its first Eurobonds in 15 years, raising $ 4.4 billion, and analysts believe European markets will be a more significant source of funds for the Asian giant going forward..
All bonds offered buyers a yield of 2 to 3%. 10-year US Treasury bonds floated on Tuesday posted 1.75%, according to Refinitiv data, nearly 150 basis points below their highs in October last year.
«From a tactical funding point of view, now is the best time to get relatively inexpensive funding», – said Alex Kozhemyakin, Head of Emerging Markets Debt at Macquarie Asset Management in New York.