China Receives $40 Billion in Orders for Dollar Bonds Issued in Saudi Arabia

China received over $40 billion in purchase orders for its first dollar-denominated bond issuance since 2021. This high demand was 20 times the amount offered, which led to a reduction in the yield China will pay, bringing it to just one basis point above what the U.S. pays on similar Treasury bonds. China raised $2 billion through three- and five-year bonds, with yields just one and three basis points above U.S. Treasury yields, according to sources familiar with the matter. The bonds were initially priced with a spread of around 25-30 basis points. Unusually, the bonds were sold in Saudi Arabia, rather than the typical venues of London, New York, or Hong Kong. Last week, China appointed investment banks to manage the issuance of three- and five-year dollar bonds in Saudi Arabia. The Ministry of Finance had previously announced it would issue up to $2 billion in bonds in Saudi Arabia, pending approval from the State Council.