China issues sixth tranche of yuan-denominated treasury bonds in HKSAR

China's Ministry of Finance (MOF) issued the sixth tranche of yuan-denominated treasury bonds of 2024 worth 6 billion yuan ($825.5 million) in the Hong Kong Special Administrative Region (HKSAR) on Wednesday.

The new issuance of the 2-year sovereign bonds had an oversubscription rate of 1.85 times, the 3-year treasury bonds had an oversubscription rate of 2.96 times, and the 5-year one achieved 2.94 times oversubscription rate, according to a document released by the Hong Kong Monetary Authority. 

For all three maturities, the minimum accepted prices were significantly higher than the average prices in the secondary market, according to a local report by RTHK.

Higher oversubscription rates indicate heightened investor enthusiasm and stronger confidence in the investment, analysts said.

The fifth tranche of 8 billion yuan in treasury bonds issued to institutional investors in 2024 was highly popular among investors, achieving an oversubscription rate of 3.61 times, according to the MOF. 

"China's economic recovery continues to gain momentum, supported by strengthened policy measures, and the country is on track to achieve its growth targets for this year, offering robust support for investor confidence," Zhao Xijun, co-president of the China Capital Market Research Institute at Renmin University of China, told the Global Times on Wednesday.

This year, the MOF issued 55 billion yuan in treasury bonds in the HKSAR, further strengthening the regular issuance mechanism for yuan-denominated treasury bonds in the region, and the 6 billion yuan marks the conclusion for this year, media reported.

Experts emphasized that the issuance plan reflects the Chinese central government's unwavering determination and tangible efforts to bolster Hong Kong's position as an international financial center.

The plan has played a significant role in diversifying and enhancing Hong Kong's offshore yuan market, expanding the treasury bond market, and advancing the overall development of the offshore yuan bond market, Zhao said. 

"The oversubscription rates reflect the strong recognition of yuan-denominated treasury bonds issued by the MOF among institutional investors in Hong Kong. This demonstrates not only the robust national credit underpinning these bonds and the reliability of the Chinese yuan but also their strong appeal as an investment product in the market," Zhao added.