(Yicai) Sept. 27 -- China has returned to the euro debt market after a three-year absence, attracting record investor demand for its EUR2 billion (USD2.2 billion) sale of sovereign bonds.

The issuance was oversubscribed by 8.1 times at EUR16.2 billion (USD18.1 billion), the finance ministry announced yesterday.

Two euro bond tranches were issued: a EUR1.25 billion note with a three-year term and 2.517 percent interest rate, and a EUR750 million (USD837.7 million) note with a seven-year term and 2.738 percent rate. They will be listed on the Hong Kong Stock Exchange and Euronext Paris.

Fifty-one percent of the buyers were banks, followed by sovereign and international entities at 26 percent, asset management firms at 19 percent, and insurers at 4 percent. By geography, 51 percent of subscribers were Asian, 36 percent European, 8 percent American, and 5 percent Middle Eastern.

"The record oversubscription for this issuance reflects international investors' confidence in China's sovereign credit," said Zhao Tingchen, senior researcher at Bank of China Research Institute.

The three-year bond was oversubscribed by 6.48 times, while the seven-year bond was oversubscribed by 10 times, reflecting international confidence in China's sovereign debt and long-term economic prospects, Zhao noted.

Yesterday was the second time since 2021 that the finance ministry had issued foreign currency-denominated sovereign bonds overseas. Three years ago, the offering was oversubscribed by 4.3 times.

The pricing of China's euro sovereign bonds is more attractive than French and German bond yields, according to a report by China International Capital.

China's foreign currency bonds totaled USD1.31 trillion as of March 31, accounting for about 52 percent of the country's overseas debt, according to the State Administration of Foreign Exchange. Of that, bonds denominated in US dollars, euros, Hong Kong dollars, and Japanese yen accounted for 83 percent, 7 percent, 4 percent, and 4 percent, respectively.

Editor: Futura Costaglione