(Bloomberg) — China has started marketing dollar bonds in Saudi Arabia, marking the country’s first debt sale in the U.S. currency since 2021.
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It is offering the three- and five-year securities with initial price guidance of about 25 basis points and 30 basis points above respective U.S. Treasury yields, according to people familiar with the matter. The Treasury Department said earlier this month that it plans to sell $2 billion worth of notes.
Saudi Arabia is an unusual location for the sale, with London, New York and Hong Kong normally chosen for such transactions. But the choice comes after recent efforts to strengthen economic ties. Officials from both countries met earlier this year to discuss cooperation, and warming relations have been reflected in steps such as a doubling of investments in Saudi Arabia by China’s largest steelmaker.
“It is in line with the increasing connections between two countries,” said Ting Meng, senior Asia credit strategist at Australia & New Zealand Banking Group. “The bond is the same format as previous bonds, but there could be more investors from the Middle East. Final pricing could be flat or even negative for US Treasuries,” she added.
According to an earlier bond issuance document seen by Bloomberg, the debt will trade on Nasdaq Dubai and be listed on the Hong Kong stock exchange.
China sold 2 billion euros worth of banknotes in Paris in September, the first sale of euro-denominated bonds in three years.
In recent months, China has unveiled plans to shore up its ailing economy. Last week, the Treasury Department announced a $1.4 trillion bailout for indebted local governments, although it stopped short of further stimulus measures to boost domestic demand.
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