Executive Intelligence Review
Subscribe to EIR


China Virtually Issues U.S. Treasury Notes

Oct. 27, 2017 (EIRNS)—China issued $2 billion in 5- and 10-year bonds on global bond markets Oct. 26 and denominated them in dollars. Though most purchases came from funds and investors in Europe, the bonds were also bought in the United States, and demand for them was very strong. "Investors’ view of China is at its strongest point ever," the Wall Street Journal quoted one European bond analyst.

The bonds were bought at just 0.15% higher interest rates than those of U.S. 5- and 10-year Treasuries. This had not been expected by the Wall Street and London banks handling the sale, who had priced it .4-.5% above Treasuries, and were proven wrong. Then there are the Moody’s and S&P ratings agencies, who both recently cut China’s credit rating to single-A—and were proven wrong. They were also ignored; China’s Treasury issued the bonds as "unrated."

China doesn’t need such financing, as it generates all its credit internally; so this bond issue is quite rare. But its public and private corporations do go to international bond markets, and this gives them a benchmark they can use. Essentially the government has supported borrowing by companies which are involved in Belt and Road Initiative investments, making them easier to carry out.