China's Ministry of Finance successfully launched $2 billion of sovereign bonds in Hong Kong on Thursday, attracting a wide range of global investors, including many from Europe, showing strong European investor confidence and demand for Chinese sovereign bonds.

The bonds are the first US dollar denominated sovereign bonds to be issued by China in 13 years. They are expected to help establish benchmark pricing to aid Chinese companies raising funds through issuing dollar denominated bonds overseas in their international expansion, especially in the area covered by the Belt and Road Initiative, said a source from the Ministry of Finance, who asked not to be named.

"The secondary trading of sovereign bonds issued by the Ministry of Finance with an appropriate size, could maintain the benchmark yield curve of China sovereign credit," said the source.

"That would set the essential pricing reference for offshore financings by Chinese enterprises and improve pricing efficiency."

The pricing on the Ministry of Finance bonds are favorable. The $1 billion five-year bonds have a coupon rate of 2.13 percent and the $1 billion 10-year bonds have a coupon rate of 2.63 percent. Due to strong investor demand, these bonds have achieved the tightest spread and the coupons were the lowest ever paid by China in issuing US dollar bonds. Together these bonds are 11 times oversubscribed.

Jaswinder Sandher, head of debt capital markets for the Europe, Middle East and Africa region at Bank of China London Branch, said the credit quality and economic significance of China was endorsed by investors with hard cash at a very tight spread.

"After a 13 year absence from the international US dollar markets, this stunning transaction brought demand from all parts of the world," Sandher said.

"This is a landmark transaction which has had positive benefits for all outstanding bonds issued by Chinese entities. By providing a sovereign benchmark, this transaction will encourage greater asset allocation and cheaper pricing for all Chinese debt assets," Sandher said.

Bank of China is the joint lead manager and joint bookrunner for the deal. Its important role in this bond builds on its experience acting as a global coordinator for a 3 billion yuan ($436.9 million) renminbi denominated offshore government bond issued in London last year.

More than 300 accounts were involved in placing orders into the transaction, of which about one-third of the subscription came from the European market.

One European investor said on the Wednesday investor call that his company was "very interested" in the China Ministry of Finance deal after hearing about the news.

"The investors roadshow speech was very well received," he said.