Sydney: China is moving forward with plans to raise $4 billion through a two-tranche dollar bond issuance, attracting unprecedented investor interest even before the offering officially launches. According to a term sheet seen by Reuters, the demand for the bonds has already surpassed $65 billion, more than sixteen times the planned issuance.
The proposed issuance consists of a three-year dollar bond, with initial price guidance set at three-year U.S. Treasuries plus 25 basis points, and a five-year dollar bond, guided at five-year Treasuries plus 30 basis points. While the deal’s size is capped at $4 billion, the extraordinary oversubscription reflects strong confidence among global investors in Chinese sovereign debt despite ongoing geopolitical uncertainties.
This development comes in the wake of a recent easing in U.S.–China trade tensions. Last week, Chinese President Xi Jinping and U.S. President Donald Trump met in South Korea, resulting in a truce on several trade disputes. Beijing announced it would suspend a 24% additional tariff on U.S. goods for one year, while retaining a 10% levy, and also plans to lift certain tariffs of up to 15% on U.S. agricultural products starting November 10. In parallel, the U.S. agreed to reduce tariffs on Chinese goods by approximately 10 percentage points, bringing the total to 47% under the new arrangement.
From Beijing’s perspective, the dollar bond issuance represents an opportunity to secure foreign-currency funding on favorable terms while global investor demand remains strong. Limiting the offering to $4 billion despite overwhelming orders helps maintain pricing discipline and enhances the perception of scarcity, ensuring robust participation and favorable yields for the government.
For investors, the appeal lies in obtaining Chinese sovereign debt at a tight spread over U.S. Treasuries, offering diversification and relatively low risk in a volatile global environment. Analysts note, however, that issuing in U.S. dollars exposes China to exchange-rate risks, especially if the yuan weakens against the dollar, increasing local currency costs of servicing debt.
The transaction is also likely to influence broader emerging market debt trends, including in India. A successful Chinese dollar bond offering could tighten global spreads for other EM issuers and demonstrate the continued appetite of international investors for high-quality sovereign credit beyond traditional Western markets.
In summary, while modest in size, China’s upcoming dollar bond issuance has already captured global attention. With extraordinary demand, favorable pricing, and the backdrop of easing trade tensions, the offering underscores China’s strategic engagement with international financial markets and highlights the delicate balance between sovereign financing, investor confidence, and geopolitical developments.