China's Finance Ministry Issues USD2 Billion in Unrated Sovereign Bonds for First Time Since 2004
She Qingqi
/SOURCE : Yicai
China's Finance Ministry Issues USD2 Billion in Unrated Sovereign Bonds for First Time Since 2004

(Yicai Global) Oct. 24 -- China's Ministry of Finance has issued a five-year sovereign bond and a ten-year sovereign bond, each worth USD1 billion, to be listed on the Hong Kong Stock Exchange, marking the first time that dollar-denominated sovereign bonds have been issued since 2004.

China successfully issued EUR1 billion and USD500 million in sovereign bonds in October 2004.

The yield of five-year US Treasury bonds is reportedly 2.03 percent at present, and that of 10-year US Treasury bonds is 2.39 percent. The yield of these new Chinese sovereign bonds could be 50 basis points higher than that bonds issued in the US during the same period, some research institutions said.

The interest rate of CNY5-billion (USD754.4 million) three-year bonds and CNY2-billion five-year bonds issued by the Ministry of Finance in Hong Kong in June was 3.99 percent and 4.1 percent, respectively.

It's worth noting that the ministry has not hired an agency to provide the third-party rating for the sovereign bonds at this time; the investor meeting for this bond issuance is rumored to be held on Oct. 25.

Some overseas bonds are not rated. More institutions are able to subscribe to rated bonds and they have better liquidity on the secondary market. However, as long as there is market demand, bonds can also be issued in the absence of rating, industry insiders said.

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Keywords: Ministry of Finance , Sovereign Bonds , None Rating