CICC Lead the Issuance of MoF’s USD 6 Billion Sovereign Bond
On October 14th, 2020, China International Capital Corporation (“CICC”), as Lead Manager and Bookrunner, assisted China’s Ministry of Finance (“MoF”) to complete a landmark issuance of USD 6 billion sovereign bond. The total bond offering consists of USD 1.25 billion, with a yield of 0.425% in 3-years; USD 2.25 billion, with a yield of 0.604% in 5-years; USD 2 billion, with a yield of 1.226% in 10-years and USD 0.5 billion, with a yield of 2.310% in 30-years. The issuance will be listed in the Stock Exchange of Hong Kong Limited and the London Stock Exchange plc.
This sovereign bond issuance was highly appraised by international investors. On the pricing day, four tranches was announced with initial price guidance of T3+50bps area, T5+60bps area, T10+75bps area and T30+110bps area, which attracted multiple orders from many high-profile international bond investors reaching a 4.7-times oversubscription size in orderbook. The final price for the 3-years tranche was tightened to T+25bps; the 5-years tranche was tightened to T+30bps; the 10-years tranche was tightened to T+50bps; and the 30-years tranche was tightened to T+80bps, realizing an average of negative 5-10bps new issuance premium across all tranches, setting the a new lowest yield record across all tranches for China USD sovereign bonds. There is a diversified group of investors who participated in the new issuance, where international organizations, central banks and regional monetary authorities, whom previously have actively invested, as well as large pension funds, commercial banks and corporates passionately participated. Meanwhile, the extensive geographical distribution and expanded investor coverage of the new issuance shows a global recognition to the distinct China sovereign bond.
The issuance is the first-time that China issued in Reg S and 144A dual-ruled foreign currency denominated sovereign bond since they resumed international bond issuance back in 2017, the first time covering the domestic qualified-institutional buyers in the United States, and the transaction with the most extensive geographical coverage across all the outstanding China bonds. The issuance symbolizes China’s willingness and determination to boost confidence in all-around and high-level Opening-Up to the global capital markets and has profound significance for further deepening of China’s integration into the international markets. This new issuance improves China’s foreign treasury yield curve, and further benefits other Chinese issuers to benchmark their international bond financing levels in the future, deepening in the integration with the international market and cooperation with international investors, as well as, promoting the dynamics of “dual-circulation” development pattern amongst domestic and international market.
CICC, as the only Chinese investment bank to participate in the deal, was honored to have been given full access and responsibilities during the preparation stage in this symbolic landmark transaction. Continuing the past sovereign bond issuances of USD 2.0 billion in 2017, the issuance of USD 3.0 billion in 2018, the issuance of EUR 4.0 billion and USD 6.0 billion in 2019, this is the fourth consecutive year that CICC has acted as Lead Manager and Bookrunner to serve MoF’s international sovereign bond issuances, showing our exceptionally dominating position and recognition in the international debt capital market. CICC is faithful dedicated to serve our values and principals of “People-oriented with nation in mind”, “Chinese roots and international reach” and will continue to provide all-around financial services for the sustainable development of the Chinese economy and financial market.