China in first dollar bonds sale since 2004

CHINA is moving forward with plans to issue its first sovereign bonds in dollars since 2004 in a deal that will put a symbolic seal of approval on the booming offshore Asian debt market.

The ministry of finance met with bankers in Beijing yesterday to discuss the sale, according to people familiar with the plans. The deal would take place as soon as this month, according to the people, who asked not to be named, because the specifics are not public.

The ministry said in a statement it would sell $2 billion (R27.4bn) worth of notes.

Although China’s government does not need to borrow offshore, with a domestic debt market that is now the world’s third largest, its bonds will provide a new benchmark for pricing the country’s stateowned enterprises.

A successful deal will pull down those borrowing costs, and may fuel further sales after what has been record issuance so far this year.

China’s investors have been eager to snap up dollar securities, and, with the country’s borrowers obliging, the Asian dollar-bond market is effectively being transformed into a US SHORT term rental service Airbnb has removed listings in Beijing as the capital prepares to host a five-yearly party congress later this month, the most important event on China’s political calendar during which security is at its highest.

A search yesterday of Airbnb listings in the city’s centre yielded “zero” results for all of October. Listings were present as recently as Tuesday evening for periods including the congress dates of October 18 to October 31.

“Due to external circumstances,

Chinese operation.

Within as few as three years, about 80 percent of the Asian market outside Japan is likely to be Chinese, according to Goldman Sachs Asset Management. By then, its size will have surpassed $1 trillion, strategists predict.

News on the plans come little more than a week before a pivotal Communist Party leadership gathering, and underlines the government’s confidence there will be strong demand despite China’s two sovereign-rating downgrades this year. homes in certain areas in Beijing are unavailable until October 31,” Airbnb said in an e-mail to hosts.

The move, mirrored by local rental firms, comes a week before the congress, where President Xi Jinping is widely expected to consolidate power in a leadership reshuffle.

Such high-profile events are often accompanied by increased surveillance and online censorship.

During the last congress, in 2012, access to Alphabet’s Google search engine was cut off.

S&P Global Ratings cut China’s credit rating by one notch, following Moody’s Investors Service, which did the same thing in May.

Scarcity value

“It will certainly have scarcity value, and I imagine it will be snapped up pretty quickly,” Geoff Lewis, Hong Kong-based senior strategist for Asia at Manulife Asset Management, said. “It’s a clear sign of China’s determination to move into the international financial markets” and play a role “commensurate Google services have since been blocked in China.

For this year’s event, authorities have stepped up ID checks at metro stations and elsewhere in an effort to detain unregistered workers and others illegally residing in Beijing.

Four Airbnb hosts in the capital said that they had received notices from the US firm late on Tuesday, which said properties in certain areas of the city would be removed from its website until the end of the month due to “external circumstances”.

with the size of its economy”.

China’s ministry of finance said on Tuesday that it would sell $1bn of five-year notes and the same amount of 10-year debt “soon”.

Most Asian dollar bonds nowadays are sold outside the US, and China hasn’t specified which rules will govern its sovereign issue, although the ministry did say the bonds will be listed on the Hong Kong Stock Exchange.

When Postal Savings Bank of China sold $7.25bn worth of dollar debt last month, only

“Similar to action taken by other hospitality companies, Airbnb listings in certain areas in Beijing will be temporarily unavailable throughout October,” the company said in a statement.

Short-term rentals were also unavailable during the same period via local services Xiaozhu.com and Tujia.com. Neither firm responded to requests for comment.

Airbnb and other home-stay sites occupy a legal grey area in China, where tourists are required to register accommodation 3 percent went to non-Asians. That deal was the biggest since a jumbo sale by Alibaba Group Holding in 2014.

Premiums

Anticipation of strong appetite for China’s new issue had already started to reduce the premiums for Chinese issuers, strategists said last month.

As for the sovereign bonds themselves, South Korea’s offshore government debt is a key point of comparison, and tighter pricing than its Asian neighbour’s securities would be with local police, using a passport or identification card. The requirement is harder to enforce with short-term rentals.

The Ministry of Public Security and Beijing’s city police did not respond to faxed requests for comment.

“(The congress blackout) is a pain, but it’s not for such a long time,” said a 28-year-old press relations worker surnamed Liu, who rents out two flats on both Xiaozhu and Airbnb.

“As long as (bookings) open again eventually, I don’t mind,” Liu said. – Reuters

a further feather in China’s cap.

South Korean dollar bonds due in September 2023, currently the closest to a five-year note, yield about 84 basis points over US Treasuries, according to data.

The country, which has a rating two steps above China’s, has notes due in January 2027 that trade 78 basis points over comparable Treasuries.

“We expect the small $2bn issuance of five-year and 10-year China sovereign issuance will quickly become a collector’s item, with a flat curve,” said Owen Gallimore, the Singapore-based head of credit strategy at Australia & New Zealand Banking Group.

“Initially, the market will price at a discount to intraregional peers such as Korea.”

While both Moody’s and S&P flagged concerns over China’s continuing build up of debt in their sovereign downgrades this year, there has been little impact on the bond market.

Most of the debt is at the corporate and local-authority level, and both have participated in the record dollar issuance this year. Junk-rated property developers have been another notable source of supply.

With the growth of the Chinese offshore bond market, the country’s lenders have become increasingly competitive in the underwriting leagues.

Six of the 10 banks represented at yesterday’s meeting on the sovereign sale were Chinese, according to people familiar with the discussions. Citigroup, Deutsche Bank, HSBC Holdings and Standard Chartered were the four international firms represented.

Agricultural Bank of China, Bank of China, Bank of Communications, China Construction Bank and Industrial & Commercial Bank of China – all state-owned lenders – and China International Capital Corporation were the six Chinese groups at the gathering, the people said. – Bloomberg