CICC Facilitates China’s Ministry of Finance’s US$2bn Sovereign Bonds Offering

On October 26, 2017, the Ministry of Finance (“MoF”) on behalf of the central government of the People’s Republic of China completed a landmark issuance of USD 2 Billion sovereign bond in Hong Kong. The bond offering is USD 1 Billion in 5 years and USD 1 Billion in 10 years. This issuance is unrated. China International Capital Corporation (“CICC”) acted as Joint Lead Manager and Joint Bookrunner.

This is the country’s first sovereign bond issuance in 13 years. On pricing day, the bond was announced with initial price guidance of T5+30-40bps and T10+40-50bps. With overwhelming global market demands, the issuance attracted many sovereign funds and international institutional investors which led to a strong orderbook of over USD 21 Billion, realizing a 10-times oversubscription. The final price for the 5-years was tightened to T5+15bps with reoffer yield at 2.196% and coupon at 2.125%, and the final price for 10-years was tightened to T10+25bps with reoffer yield at 2.687% and coupon at 2.625%, which is similar yield to the sovereign bonds of many developed countries. The USD sovereign bond investors were diverse and complex, over 50% of the bonds were allocated to investors outside of Asia.

At noon on October 27, 2017, MoF held celebration ceremony in Government House of Hong Kong for the successful issuance of the China’s 2 Billion US dollar sovereign bonds. Carrie Lam, the chief executive of Hong Kong S.A.R., was specially invited and delivered speech to congratulate on the successful issuance of the sovereign bond. Shi Yaobin, vice minister of the Ministry of Finance and Qiu Hong, vice director of the Liaison Office of the central people’s government in the Hong Kong S.A.R, attended the ceremony and delivered speech. Bi Mingjian, CEO of CICC, attended the celebration ceremony.

The success of this sovereign bond issuance demonstrates the international investor’s confidence in China’s sovereign credit and the development of China economy. This bond will set the benchmark rate for USD denominated treasury yield for China, making the treasury curve more complete and comparable in the international capital market. This issuance not only enhances the opening up of China’s financial sector, but also promotes the financial sector to better serve the real economy. Meanwhile, this bond delivers more clarity and exposure for international investors to understand China.

CICC was the only investment bank and securities firm to participate in this highly significant and prestigious sovereign bond issuance, showing our exceptionally strong leading position in the international debt capital market. “People-oriented with nation in mind”, “Chinese roots and international reach”, CICC is faithful to serve our values and principals, and will continue to provide all-around financial services for the sustainable development of the Chinese economy and financial market.