China Sells $4 Billion of Dollar Bonds, Borrowing Cheaply Once Again

China raised $4 billion from a sale of U.S. dollar bonds, borrowing cheaply again from international investors that flocked to its offering despite the country’s slowing economic growth.

The four-part deal comprised bonds that mature in three, five, 10 and 30 years, similar to China’s previous international bond sale a year ago.

The new three-year debt was priced to yield 0.06 percentage point above equivalent U.S. Treasurys. The 10-year bonds were priced to yield 0.23 percentage point over Treasurys.

The bonds that mature in 2051 provided an extra yield of 0.53 percentage point.

Investors placed more than $23 billion in orders for the entire deal, including about $6.4 billion of orders from the banks underwriting the bond sale. Demand was the strongest in the three- and five-year bonds, which drew orders of more than $6.4 billion and $9.3 billion respectively, a notice sent to investors showed.

The bonds due in 2051 were the most popular with investors outside of Asia, compared with the other notes. U.S. investors bought 23% of those 30-year bonds, while buyers from Europe, the Middle East and Africa accounted for 53%. Asian investors were allocated the majority of the three-, five- and 10-year notes.

China on Monday said its economy expanded 4.9% in the third quarter from a year earlier, a sharp slowdown from the 7.9% growth rate in the second quarter.

The gross domestic product increase was lower than many economists’ forecasts, as economic growth was hit by power shortages, supply-chain disruptions, and drops in real estate activity following Beijing’s attempts to rein in the country’s debt-saddled property developers. A wide-ranging regulatory crackdown on Internet-technology companies has also weighed on consumer and business sentiment.

Bond investors said they aren’t concerned about China’s creditworthiness, despite these issues.

“The slowdown in the economy, such as in the real-estate sector, is not an issue for the Chinese sovereign market,” said Nick Eisinger, head of emerging market fixed-income strategies at Vanguard. “There is not really that much credit risk associated with Chinese sovereign bonds,” he added.

China recorded a steep economic slowdown in the third quarter as its pandemic bounceback fades—and now, Beijing is taking on longer-term issues including household debt and energy consumption. WSJ’s Anna Hirtenstein explains what investors are watching. Photo: Long Wei/Sipa Asia/Zuma Press

Sanjay Guglani, chief investment officer of Silverdale Funds in Singapore, didn’t participate in the deal but said the spread between China’s dollar bonds and U.S. Treasurys could shrink over time, as the country’s economic strength improves relative to the U.S.

“What the Chinese government is doing in terms of the property market and curbing antitrust activity will make growth more robust, more sustainable, and more competitive in the long term,” said Mr. Guglani.

China’s dollar bonds carried strong investment-grade ratings of A1 from Moody’s Investors Service and the equivalent A+ from S&P Global Ratings and Fitch Ratings.

Moody’s said it expected China to be able to mitigate credit risks emanating from higher public-sector debt and “pockets of financial stress likely to become apparent from time to time.” The ratings firm added that recent volatility in the property sector was unlikely to present a systemic threat, but prolonged industry slump could lead to lower revenues for regional and local governments and pressure smaller financial institutions.

China’s Ministry of Finance had hired 14 banks to handle its latest bond sale. They included large U.S. and European investment banks as well as Chinese state-owned banks.

Write to Frances Yoon at and Anna Hirtenstein at

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