TYC FINANCE: ALI

On November 13th, local time, the Ministry of Finance of the People's Republic of China, on behalf of the central government, successfully book-issued $2 billion in sovereign bonds in Riyadh, the capital of the Kingdom of Saudi Arabia. The issuance includes $1.25 billion in 3-year bonds with an interest rate of 4.284%, and $750 million in 5-year bonds with an interest rate of 4.340%.

The issuance of these US dollar sovereign bonds was met with a warm market response, with international investors showing a high level of subscription enthusiasm. The total subscription amount reached an astonishing $39.73 billion, which is 19.9 times the issuance amount. Among them, the subscription multiple for the 5-year bonds reached 27.1 times, setting a new record for global sovereign bond issuance in recent years. The issuance interest rates for the 3-year and 5-year US dollar sovereign bonds were only 1 basis point and 3 basis points higher than the same-term US Treasury bonds, respectively, setting a new record for the lowest spread in the US dollar bond market.

The types of investors in these US dollar sovereign bonds are diverse, and the geographical distribution is broad. Investors from Asia, the Middle East, Europe, and the United States account for 68%, 8%, 20%, and 4%, respectively, with the proportion of investors from the Middle East region reaching a historical high. The types of investors include sovereign states, banks, fund managers, insurance companies, and dealers, accounting for 9%, 50%, 37%, 2%, and 2%, respectively.

Deepening the Interconnection between China and the Middle East Financial Markets

This issuance marks the first time China has issued sovereign bonds in the Middle East. Saudi Arabia, as one of the earliest countries to support and participate in the joint construction of the "Belt and Road" initiative, is an important country in the Middle East, and its capital, Riyadh, is an important international financial center in the region. These bonds will be listed on the Hong Kong Stock Exchange and NASDAQ Dubai, which will help deepen international financial cooperation. As a globally important international financial center, Hong Kong is a traditional listing place for China's offshore national bonds, with a well-developed financial infrastructure and a diverse group of international investors. The listing of national bonds in Hong Kong demonstrates the central government's strong support for building Hong Kong as an international financial center.

At the same time, this issuance marks the first time that NASDAQ Dubai has been used as a listing venue for national bonds, which is an important attempt at economic and financial cooperation between China and Middle Eastern countries and a significant breakthrough in the interconnection between China and Middle Eastern financial markets. This not only showcases China's economic achievements to the world, especially to Middle Eastern countries, and conveys China's determination for high-level opening up, but also attracts more investors from the Middle East to focus on Chinese national bonds and other assets. Zhao Tingchen stated that the listing of national bonds in Dubai enriches the financial product supply in the Middle East market and helps enhance the international competitiveness and global influence of Dubai's financial center, providing a new model for multilateral cooperation and mutual benefit under the "Belt and Road" initiative.

Significance of China's Bond Issuance in Saudi Arabia for Islamic Finance

The issuance of bonds by China in Saudi Arabia is not only an important milestone in financial cooperation between China and the Middle East but also another fruitful result of China's joint progress with Saudi Arabia and other Middle Eastern countries under the "Belt and Road" framework. For Islamic finance, this move has far-reaching significance. It not only demonstrates China's emphasis on and participation in the Islamic financial market but also provides new investment opportunities and cooperation platforms for the Islamic financial system. In this way, financial cooperation between China and the Middle East will further promote the economic complementarity of both parties, enhance the stability and diversity of the financial market, and also provide new impetus for the global development and innovation of Islamic finance.

We firmly believe that the issuance of US dollar sovereign bonds in Riyadh, Saudi Arabia, will open new channels for economic cooperation between China and the Middle East, especially in achieving substantial breakthroughs in the interconnection with Middle Eastern financial markets. This is not only an important milestone in financial cooperation between China and the Middle East but also another fruitful result of China's joint progress with Saudi Arabia and other Middle Eastern countries under the "Belt and Road" framework.