Source: Global Times    Published: 2024-11-5

By GT staff reporters

China's Ministry of Finance (MOF) said on Tuesday that it would issue up to $2 billion of US dollar-denominated sovereign bonds in Riyadh, Saudi Arabia, during the week starting November 11, following approval by the State Council. 

The move can help boost confidence in China's economy and sovereign credit among overseas markets while providing a new way for the Chinese government to raise funds, Wang Peng, an associate research fellow at the Beijing Academy of Social Sciences, told the Global Times on Tuesday. 

Issuing offshore sovereign bonds is an important option for China to diversify the ways it uses to attract investment, and it shows that overseas markets highly recognize the country's economy and assets, said Dong Shaopeng, a senior research fellow at the Chongyang Institute for Financial Studies at Renmin University of China.

As the US dollar remains a solid international reserve currency, issuing US dollar bonds can attract more international investors and reduce financing costs, while the move will offer the Chinese government a new and relatively low-cost method for fundraising, Wang noted, 

Wang said that the bond issue will enhance the opening-up of China's financial sector for global investors to better understand and invest in the country. The issue will also facilitate the accumulation of sovereign credit data and improve China's sovereign credit rating system.

The MOF in October 2021 issued US dollar-denominated sovereign bonds worth $4 billion in China's Hong Kong Special Administrative Region (HKSAR). In September this year, the ministry issued up to 2 billion euros ($2.18 billion) of notes in Paris, following an issuance of 4 billion euros in the HKSAR in November 2021.  

As of October 2024, the MOF had represented the Chinese government in issuing sovereign bonds overseas for 16 consecutive years. The cumulative issuance stood at 373 billion yuan ($52.49 billion) of treasury bonds, $21 billion in US dollar-denominated bonds and 14 billion euros in euro-denominated bonds, said Yu Hong, an official of the ministry, in October, stcn.com reported. 

By selling up to $2 billion of notes in Riyadh, Wang anticipated further strengthening of financial cooperation between China and Saudi Arabia as well as between China and the Middle East region.

The first Saudi exchange-traded fund that tracks Hong Kong stocks was listed on the Saudi stock exchange on October 30 in Riyadh, marking a milestone in financial and trade relations between Hong Kong and the Middle East, the Xinhua News Agency reported. 

Wang said that there are several sectors with the potential for cooperation, such as currency swaps and settlements, expanding the opening-up of financial markets, financial regulation and green finance.