The story around China issuing USD-denominated sovereign bonds in Saudi Arabia is generating an enormous amount of buzz in China, and could potentially be immensely important. I strongly suspect it's a message to the upcoming Trump administration. A small 🧵 - ThreadSky

rnaudbertrand.bsky.social • 98 days ago

The story around China issuing USD-denominated sovereign bonds in Saudi Arabia is generating an enormous amount of buzz in China, and could potentially be immensely important.

I strongly suspect it's a message to the upcoming Trump administration.

A small 🧵

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peskypesky.bsky.social•98 days ago

https://globalbusinessoutlook.com/finance/chinas-dollar-bond-issuance-in-kingdom-a-game-changer/

kruiskade.bsky.social•96 days ago

Many thanks for your work on social media: masterful and powerful. The world needs your insights.

mommom-dayton.bsky.social•89 days ago

Genius move on the part of China if you're correct.

rnaudbertrand.bsky.social•98 days ago

On the face of it, it's not a major story: China issued $2 billion in USD-denominated sovereign bonds in Saudi Arabia, which means that investors lent USD to the Chinese government that they promised to pay back. That's what a bond is.

So far, relatively boring.

rnaudbertrand.bsky.social•98 days ago

The first somewhat interesting aspect of it is that the bonds were oversubscribed by almost 20x (meaning $40+ billion in demand for $2 billion worth of bonds), which is far more demand than usual for USD sovereign bonds.

rnaudbertrand.bsky.social•98 days ago

Typically US Treasury auctions see oversubscription rate between 2x to 3x so there obviously seems to be very strong market appeal for China's dollar-denominated debt.

rnaudbertrand.bsky.social•98 days ago

The second interesting aspect is that the interest rate on the bonds was remarkably close to US Treasury rates (just 1-3 basis points higher, i.e. 0.01-0.03%), which means that China is now able to borrow money - in US dollars (!) - at virtually the same rate as the US government itself.

rnaudbertrand.bsky.social•98 days ago

That's the case for no other country in the world.

As a benchmark, countries with the highest credit ratings (AAA) typically pay at least 10-20 basis points over US Treasuries in the rare instances when they issue USD bonds.

rnaudbertrand.bsky.social•98 days ago

The third interesting aspect is the venue itself for this bond sale: Saudi Arabia. This is unusual since sovereign bonds are typically issued in major financial centers, not in Riyadh.

peggysanders.bsky.social•98 days ago

@whats-left-of-bevo.bsky.social

sharonclues.bsky.social•98 days ago

@rogueunit.bsky.social you might enjoy this thread

changesanjeev.bsky.social•98 days ago

Who’s taking bets on the first country to be helped with its $ indebtedness? I pick Pakistan.

It’s on the verge of bankruptcy and needs $8 bn for energy imports. A simple win is to pay for renewables and save the collapse of a key part of the BRI….

peggysanders.bsky.social•98 days ago

Read recently where China cashed in large amount $US bonds.

uncircuitous.bsky.social•95 days ago

As #America implodes and global crisis after global crisis surfaces, it seems the East is still following the direction of Chairman Mao to use the West for Chinese purposes. #SaudiVision2030

gluk.bsky.social•97 days ago

The explanation is more boring: it is not a harbinger for substantial future sovereign issuance but to pave the way for future corporate issuance tapping into new liquidity pools.

https://bsky.app/profile/gluk.bsky.social/post/3lbimsrb2ts2z

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