China today auctions total CNY72bln bonds.....>

CHINA: China today auctions total CNY72bln bonds

FT ON CHINESE BONDS - "The strategic pattern in the Chinese board game emerges

slowly from seemingly disparate moves. A $2bn bond issue by China's finance

ministry resembles one of these. The deal is immaterial to state finances. The

reception from foreign investors is what matters. China's territorial and

financial ambitions are inextricably linked. This financing seeks to push a

frontier forward. China's last dollar issue was more than 10 years ago. Smooth

access to the market would be handy, given that Rmb3.6tn ($542bn) of state debt

matures next year, according to Bloomberg data. Only 1 per cent is currently in

dollars. China's bonds will probably be generously priced to please yield-hungry

overseas buyers at around 50 basis points over US Treasuries. Heftier dollar

bond issuance can only be one gambit in matching China's mission with its means.

One Belt, One Road, an infrastructure push to expand Chinese influence abroad,

will cost $1tn. That is hefty, compared even with $3tn of foreign exchange

reserves. Off-balance sheet financing must play a part. The government is

nudging Chinese companies to buy strategic transport assets."