The Ministry of Finance, acting on behalf of the central government, issued 4 billion euros ($4.61 billion) in sovereign bonds in Luxembourg on Nov 18. The issuance of the bonds follows the issuing of China's first-ever overseas renminbi-denominated sovereign green bonds — 6 billion renminbi ($846.85 million) in London in April — and a $4 billion bond offering in Hong Kong earlier this month.

The latest bond sale by China is notable for a number of things. First, the issuance is the largest euro-denominated sovereign bond offering by any Asia-Pacific issuer since 2021. For another, the subscription rate was the highest for a euro-denominated bond offering by China.

According to the Ministry of Finance, the bond offering drew total subscriptions of 100.1 billion euros, or 25 times the issued amount. The 7-year tranche achieved an even higher oversubscription of 26.5 times its size.

The demand for the bonds is not only a testament to global investors' strong confidence in China's sovereign creditworthiness, but also a vote of confidence in the country's sound economic fundamentals and long-term growth prospects. That undoubtedly reflects China's solid sovereign creditworthiness, which is firmly anchored in the country's sustained economic strength and unwavering commitment to financial openness.

In an era of heightened global economic uncertainty, the demand for Chinese assets speaks for itself.

As Wang Yunfeng, president of HSBC Bank (China), said the demand reflected "the global market's strong confidence in China's sovereign creditworthiness and economic outlook".

It is worth noting that during last week's bonds issuance, the investors were highly diversified — European, Asian, Middle Eastern, and US offshore investors accounted for 51 percent, 35 percent, 8 percent, and 6 percent of allocations, respectively. As for investor category, 26 percent of the participants were sovereign entities, 39 percent fund and asset management firms, 32 percent banks and insurers and 3 percent dealers.

In other words, the bonds attracted broad-based global investor interest, with a significant share coming from central banks, sovereign wealth funds and public-sector institutions. Notably, 65 percent of allocations went to investors outside Asia, underscoring strong international confidence in China and the benchmark status of this issuance in global markets.

Wang said that the successful issuance sent a strong, positive signal to investors about China's commitment to high-level openness and deeper integration into global financial markets. In return the demand creates broader opportunities for future China-EU financial cooperation through enhanced engagement.

Since 2009, in line with China's broader strategy to further open up its financial sector, the Ministry of Finance has issued bonds overseas on a regular basis, including offshore RMB treasury bonds, US dollar-denominated sovereign bonds, and euro-denominated sovereign bonds. Starting in 2017, issuances of dollar-denominated or euro-denominated sovereign bonds have taken place in major international financial centers such as Hong Kong and Paris.

The exceptionally high oversubscription rates for China's bond issuances come at a time when the US 10-year treasury rate has held at above 4 percent in recent months. That means, China has secured stronger demand at lower yields. All in all, this is not short-term speculation, but a recognition of the strengths of the Chinese economy and its development potential.