Nov 20, 2020 05:58 AM

China Sells First Negative-Yielding Sovereign Bonds

China’s negative-yielding sovereign bonds were well received by international investors.
China’s negative-yielding sovereign bonds were well received by international investors.

China raised 4 billion euros ($4.7 billion) Thursday in a three-part debt deal, including its first negative-yielding sovereign bonds.

The deal includes 750 million euros of five-year bonds, 2 billion euros of 10-year bonds and 1.25 billion euros of 15-year bonds. The five-year tranche achieved a negative yield of 0.152%, while the 10- and 15-year bonds were sold with positive yields of 0.318% and 0.664%.

It was a sign that China attaches great importance to European markets amid a year of market turmoil, said Samuel Fischer, head of China onshore debt capital markets at Deutsche Bank, one of the bookrunners of the deal.

This was the second consecutive year that the Ministry of Finance issued sovereign eurobonds since it returned to the eurobond market last year.

In November 2019, China sold 4 billion euros of bonds for the first time since 2004. The three-part deal consisted of 2 billion euros of seven-year notes at a yield of 0.197%, 1 billion euros of 12-year bonds at a yield of 0.618%, and 1 billion euros of 20-year bonds at a yield of 1.078%.

The 10- and 15-year bonds use Euroclear and Clearstream, two European bond settlement systems, while the five-year bonds use the Central Moneymarkets Unit, the settlement system operated by the Hong Kong Monetary Authority. This arrangement is meant to support Hong Kong’s financial infrastructure, though the five-year bonds were also open to global investors, according to a person close to the underwriters.

More than 60% of investors were European institutions, according to the bookrunners. The issuance received massive orders from investors with oversubscription of 4.45 times, said Standard Chartered Bank, which acted as joint lead manager and joint bookrunner for the deal.

The investor base is highly diversified, including central banks, sovereign wealth funds and global asset managers spanning Europe, Asia and the U.S., Standard Chartered Bank said. European investors accounted for 85% of the 15-year tranche, demonstrating that international investors are full of confidence in China’s strong economic rebound and its future development amid the lingering global COVID-19 pandemic, the bank said.

The bonds will be listed on the London Stock Exchange’s International Securities Exchange, the Luxembourg Stock Exchange’s Euro MTF Market and the Hong Kong Stock Exchange.

Contact reporter Denise Jia ( and editor Bob Simison (

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