China’s first euro-denominated government bond in 15 years has been gobbled up by yield-hungry investors including European pension funds, feeding expectations of further deals, reported the Financial Times.
Beijing’s Ministry of Finance sold a trio of bonds on Tuesday, raising a total of €4 billion ($4.4 billion). There were close to €20 billion of orders from investors, according to figures shared with the FT. The issuance will set a new price benchmark after the maturity of the last euro-denominated sovereign bond, which was issued in 2004.
For big investors, the Chinese-issued, euro-denominated bonds provided an opportunity to diversify and grab higher yields than those available in Europe. The bonds had maturities of seven, 12 and 20 years, with yields of 0.197%, 0.618% and 1.078%, respectively. By contrast, a seven-year German Bund yields minus 0.5%.
The deal is likely to encourage further issuance, according to analysts, and sets a price benchmark for corporate bonds. It demonstrated “the depth of market demand for quality Asian issuers,” said Samuel Fischer, head of China onshore debt capital markets at Deutsche Bank, one of 12 banks involved in the deal.