UPDATE 1-China raises 4 bln euros in bond deal

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HONG KONG, Nov 11 (Businesshala) – China on Thursday finalized a three-tranche bond deal worth 4 billion euros ($4.63 billion), a term sheet seen by Businesshala showed.

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The finance ministry raised €1.5 billion in three-year tranches, €1.5 billion over seven years, and €1 billion in 12-year tranches.

Wang Sheng, head of investment banking at CICC, who worked on the deal, said the issuance would make the euro “a pricing benchmark for foreign Chinese companies” as well as improve investors’ options for investing in China’s economy. Diversity will help.

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According to two sources with direct knowledge of the matter, the deal garnered orders worth around EUR 16 billion in all tranches, four times the size of the total deal.

Most of the buyers were located in Europe, sources said, while central banks were active buyers of short-dated bonds.

The sources could not be named as the information had not yet been made public.

China’s finance ministry did not immediately respond to a request for comment from Businesshala.

One of the sources said there were orders worth 5.9 billion euros in three-year tranches, 6 billion euros over seven years and 3.8 billion euros in a 12-year deal.

The price of each tranche is significantly cheaper than the guidance given to investors when the deal opened on Wednesday.

The three-year tranche was priced flat with the mid-swap rate after initial pricing guidance plus 20 basis points, while the seven-year tranche was priced 20 basis points cheaper than previously flagged.

12-year installment pricing was set at the mid-swap rate and 52 basis points, as compared to guidance of plus 65 basis points.

($1 = 0.8648 Euro)

Reporting by Scott Murdoch in Hong Kong and Samuel Shen in Shanghai; Editing by Sherry Jacob-Phillips and Simon Cameron-Moore

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