China hires 10 banks for $2b bond issue

China has hired 10 banks including Agricultural Bank of China Bank of Communications, and Citigroup for its $2 billion (Dh7.3 billion) dollardenominated sovereign bond issue, according to an internal bank memo seen by Reuters yesterday.

Besides Citigroup, other foreign banks hired by the People’s Republic of China, acting through the Ministry of Finance, for the issue are Deutsche Bank, HSBC and Standard Chartered, the memo showed.

Bank of China, China Construction Bank, China International Capital Corp, and Industrial and Commercial Bank of China will also be working on the transaction.

Due to its scarcity, the bond is expected to see strong investor demand despite downgrades of China’s sovereign credit rating this year by S&P Global Ratings and Moody’s Investors Service. Both agencies cited increasing risks from the country’s build-up of debt.

But the bond sale will test if the rating agencies’ actions would increase borrowing costs for institutions in the world’s second-largest economy.

The memo said the banks hired for the bond issuance would arrange a meeting with investors in Hong Kong on Wednesday. Sensex (IN)