China is making headlines with its first dollar bond issuance since 2021, choosing Saudi Arabia as an unusual but strategic location. The three- and five-year bonds are offered at 25 and 30 basis points above U.S. Treasury yields, respectively, marking a move to bolster its presence in the Middle East amid rising global demand. The deal, managed by China’s Ministry of Finance, has already attracted over $25.7 billion in orders — a testament to strong investor interest, with final pricing expected to either match or potentially dip below U.S. Treasury rates.
This sale marks a shift from the typical venues of London, New York, or Hong Kong. Instead, the decision to launch in Saudi Arabia reflects recent collaborative efforts and increased investments between the two nations. For instance, China’s top steel producer recently doubled its investments in the Kingdom. According to Ting Meng, senior Asia credit strategist at ANZ Bank, these bonds may draw increased interest from Middle Eastern investors, underlining deepening bilateral ties.
Listed on Nasdaq Dubai and Hong Kong, this bond issuance follows China’s recent euro-denominated sale in Paris and highlights the country’s intent to support its economy, which has faced challenges. In a related move, China announced a $1.4 trillion relief fund to aid debt-laden local governments, though it has refrained from broader economic stimulus for domestic growth.