(Bloomberg) — China has begun selling dollar-denominated bonds in Saudi Arabia, the country’s first U.S.-denominated bond sale since 2021.
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The company is issuing three-year and five-year notes with initial price guidance of about 25 basis points and about 30 basis points above U.S. Treasury yields, respectively, people familiar with the matter said. The Treasury Department announced earlier this month that it plans to sell up to $2 billion worth of banknotes.
The selection of Saudi Arabia as the venue for the sale is unusual, with London, New York and Hong Kong typically chosen as venues for such transactions. However, this choice was made after recent efforts to strengthen economic ties. Officials from both countries met earlier this year to discuss cooperation, and the warming of relations has been seen in moves such as China’s biggest steel producer doubling its investment in Saudi Arabia.
“This is consistent with growing ties between the two countries,” said Ting Meng, senior Asia credit strategist at Australia New Zealand Banking Group. “This bond has the same format as the previous bond, but could attract more Middle Eastern investors. Final pricing could be flat or even negative for U.S. Treasuries,” he added. .
The bonds will trade on Nasdaq Dubai and be listed on the Hong Kong exchange, according to previous bond issuance documents seen by Bloomberg.
China sold 2 billion euros ($2.1 billion) of bonds in Paris in September, its first euro-denominated bond sale in three years.
China has announced plans in recent months to support its struggling economy. The Treasury Department last week announced a $1.4 trillion relief program for debt-laden local governments, but stopped short of further stimulus to stimulate domestic demand.
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