China raises US$6b as US investors overlook political tensions

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

The deal, the fifth foreign currency denominated bond since China reinstated its offshore issuance programme in 2017, attracted an orderbook of US$27.2 billion, the term-sheet showed.

China has carried out four US dollar deals and one euro deal in the past three years.

The pricing was set at US Treasuries plus 25 basis points for the US$1.25 billion three-year tranche, 30 basis points for the US$2.25 billion five-year tranche, 50 basis points for the US$2 billion 10-year tranche and 80 basis points for the US$500 million 30-year tranche, the term-sheet showed.

It was the first time China has offered a bond deal to US-based investors who were most active in the longer-dated tranches of the transaction.

US investors, primarily fund managers, were the largest buyers of that bond, picking up 47 per cent of the US$500 million sold, according to the term-sheet.

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

The source 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 signs emerged the political stand off between the US and China showed no signs of easing.

The US 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.

REUTERS