China's dollar-bond sale sees marked slump in buying by US-based investors

China’s latest dollar-bond sale saw a marked slump in buying by US-based investors compared with last year’s offering, a stark contrast that’s emerged as bilateral trade tensions escalate.

Diminished demand from the US contributed to a slide in the bid ratio for the $3 billion sale last week, which was held during a bout of global market volatility. Orders amounted to 4.4 times total issuance, compared with about 10.5 times in last year’s $2 billion offering. With China’s economy slowing, recent moves by policy makers to shore up the expansion might also have dulled overseas appetite, said Anthony Leung at Wells Fargo.

“US investors may want to stay on the sidelines as China’s easing measures tend to be perceived by them as ‘the country is bracing for a hard time ahead,” said Leung, a senior analyst at Wells Fargo in Hong Kong. More broadly, “it’s probably not surprising to see US demand has declined this time amid trade war and hacking concerns,” he said.

Offshore US investors took only 2 per cent of the five-year dollar notes sold last week, down from 20 per cent last year, with the 10-year tranche seeing a drop to 4 per cent, from 19 per cent.

A debut offering of 30-year bonds saw 6 per cent allocated to this group.