China’s 1st overseas RMB-denominated sovereign green bond draws strong int’l subscriptions

China's first-ever overseas RMB-denominated sovereign green bond has seen strong subscriptions from international investors following its issuance in London, UK, on Wednesday.

The deal totals 6 billion yuan (about 833.33 million U.S. dollars), including 3 billion yuan for a three-year term with an interest rate of 1.88 percent, and 3 billion yuan for a five-year term at an interest rate of 1.93 percent. Both rates are lower than the yields on comparable treasury bonds in the Hong Kong Special Administrative Region secondary market.

Notably, the London offering spurred strong demand from international investors -- drawing a diverse range of participants across various regions. Total subscriptions hit 41.58 billion yuan (about 5.7 billion U.S. dollars), 6.9 times the issuance value.

"This issuance has attracted extensive attention from both domestic and international investors, drawing enthusiastic subscriptions from global investors, including monetary authorities, commercial banks, insurance companies and fund management institutions. The total confirmed subscription surpassed 40 billion yuan (about 5.5 billion U.S. dollars), more than six times the issuance value, demonstrating that global investors highly recognize China's sovereign credit and sustainable green development policy," said Zhu Min, chief market officer at the Bank of China London Branch.

"I think it's a very, very positive signal. China is already a leading issuer of bonds in green format. We can see from the size of the order book for this transaction that there is already extremely large demand for Chinese government bonds in sustainable format. So I think both from an offshore perspective as well as potentially onshore, we can see this act as a catalyst for more international involvement in Chinese government bond market," said Bryan Pascoe, chief executive of the International Capital Market Association.

The bond is held in the Hong Kong Monetary Authority's Central Moneymarkets Unit (CMU), and will be listed on both the Hong Kong Stock Exchange and the London Stock Exchange.

According to industry insiders, this marks the Ministry of Finance's second issuance of RMB government bonds in London after a nine-year hiatus, underscoring its significance in further deepening and supporting China-UK cooperation in the green, economic, and financial sectors.

"The issuance of the RMB-denominated sovereign green bond not only promotes infrastructure development for the offshore RMB market in London, but also introduces a green component to China's sovereign offshore multi-currency interest rate curve," said Zhu.

China’s 1st overseas RMB-denominated sovereign green bond draws strong int’l subscriptions

China’s 1st overseas RMB-denominated sovereign green bond draws strong int’l subscriptions

The universal "reciprocal tariffs" imposed by the United States signals a decline in the U.S. economic dominance and dollar hegemony, as the country is attempting to extract excessive financial benefits from its trading partners, according to economists, who warn the Trump administration is playing a "dangerous game".

U.S. President Donald Trump last week signed an executive order on the so-called "reciprocal tariffs," imposing a 10-percent "minimum baseline tariff" before unveiling higher rates on certain trading partners. The policy sent shockwaves throughout the global economy and triggered panic on financial markets, with analysts warning of significant risks and dire economic consequences.

In an interview with the China Global Television Network (CGTN), Hong Hao, chief economist of the GROW Investment Group, a Shanghai-based hedge fund, said the tariffs reflect Trump's strategy to extract economic benefits from trading partners, particularly viewing China as a significant competitor. "Trump really believes that the trade terms with the trading partners have been unfair to the U.S., and as a result, the U.S. manufacturing sector has been hollowed out. Therefore, the U.S. is paying an excessive price for globalization, and now, it's time to pay back. I think, from this angle, he is trying to extract economic rent from its trading partners, and also he is trying to see China as one of the major U.S. rivals at this juncture. So, I think, as a result, he is playing a very dangerous game. And, as you can see, it's political theater in the sense that he is trying to dramatize the extreme pressure, so that he can get excessive rent from the opponent," he said

Trump's unilateral imposition of tariffs has eroded global confidence in the U.S. and its dollar's status, leading many to state that the American hegemony may not persist, according to Josef Gregory Mahoney, a professor of politics and international relations at East China Normal University.

"The U.S. economy is at an inflection point. There is a moment where the previous strategies being used to sustain American hegemony were no longer working. And, it's only a matter of time before the U.S. position erodes, given the fact that it's been a house of cards built on the dollar supremacy. And a lot of people don't see that as having a brighter future. This has moved past the theater stage and has moved really directly into one in which no one really has confidence in the U.S. anymore. No one has confidence in the dollar. No one has confidence in the U.S. being committed to the multilateral system, to global trade and so forth and so on," he said.

Trump playing "dangerous game" as tariff measures signal decline in U.S. dollar hegemony: economists