China saw solid demand for its third offering of dollar bonds in three years, though U.S. investors largely left the deal alone amid the trade war.

Fund managers were also a diminished presence from last year, with the bulk of the sale taken up by banks and the public sector -- a group that includes central banks and sovereign wealth funds. Final orders amounted to more than $16.5 billion for the $6 billion of securities, compared with $13.2 billion for $3 billion last year -- a significantly lower cover ratio that still underscores enduring demand.

Europeans saw even bigger appetite for the Chinese dollar debt than last year, with Europe, the Middle East and Africa taking up half of the entire five-year note issue, against 4% for buyers from the Americas. For China, the deal marks another successful benchmark offshore issue despite rising concerns about a potential decoupling with the U.S.

“It has been a very successful auction,” even with the limited American participation, Dariusz Kowalczyk, chief China economist at Credit Agricole SA in Hong Kong, said on Bloomberg TV. “It will help Chinese non-sovereign issuers raise funds cheaper, because a sovereign dollar offshore yield curve has now been formed.”

Kowalczyk also said the operation could help the yuan in the short term, presuming that China converts the dollars back to its domestic currency. The yuan could even revisit 7 per dollar in the short term, he said.

The dollar bonds were sold under Regulation S, which means they weren’t directly available to funds based in the U.S. China’s offering in 2017 saw major demand from offshore American buyers, who made up 20% of the allocation for five-year notes. Demand dwindled a year later, to just 2% for the five-years, as the U.S.-China trade war raged.

China’s 10-year notes saw an allocation of just 1% to the Americas, against 4% last year and 19% in 2017.

Fund managers, such as mutual funds, along with insurers and pension funds saw limited demand, with the exception of China’s 20-year note -- a maturity that didn’t feature in the offerings the past two years. The so-called real-money investors took up 49% of that allocation. The 10-year allocation was 17%, down from 44% last year and 70% back in 2017.

The shorter-term maturities sold Tuesday rallied in the secondary market Wednesday morning, while the premiums on 10-year and 20-year notes widened, according to credit traders.

China now has dollar securities with maturities ranging from 2022 to 2048 from the three years of sales by the Ministry of Finance.

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