China Set to Price $6 Billion Debt Deal as Soon as Wednesday

© Reuters.  China Set to Price $6 Billion Debt Deal as Soon as Wednesday
© Reuters. China Set to Price $6 Billion Debt Deal as Soon as Wednesday

(Bloomberg) — China’s government is expected to price a potential $6 billion bond sale as early as Wednesday, ahead of potential volatility from U.S. elections next month.

The Ministry of Finance is arranging investor calls for 144a and Regulation S senior bonds Tuesday, according to people familiar with the matter who aren’t authorized to speak publicly. The ministry is seeking to raise about $6 billion via multi-tranche notes that will likely include three-year, five-year, 10-year and 30-year maturities, Bloomberg reported last week.

Officials at the ministry weren’t immediately available to comment.

The planned bond sale follows the ministry’s jumbo global debt offerings in two currencies in November, when it sold $6 billion of dollar bonds and 4 billion euro notes. The former drew bumper demand with orders at more than triple the targeted size.

China’s fresh sovereign debt sale this week comes as uncertainty ahead of the U.S. elections in November is beginning to weigh on investor sentiment with some analysts anticipating a pick-up in volatility.

“By moving forward the USD bond auction to October, MOF will avert risks of facing less receptive market conditions and increased volatility due to the U.S. elections,” said Chang Wei Liang, a macro strategist at DBS Bank Ltd. in Singapore. With the Fed keeping policy rates near zero and yields hovering near record lows, China should see a significantly lower cost of funding across the curve compared to 2019, he added.

China’s Ministry of Finance hired 13 financial institutions for the sale that includes four Chinese firms, according to people familiar with the matter.

(Updates with chart after fourth paragraph, analyst comment in sixth paragraph)

©2020 Bloomberg L.P.

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