A week after the Beijing-Washington trade truce, China is eyeing a two-tranche US dollar bond to raise $4 billion. Reuters reported that the People’s Republic of China (PBOC) plans for a three-year dollar bond with the ceiling capped at $4 billion. The overall order book has topped $65 billion with an initial price guidance of about 25 basis points. The order sheet shows the guidance for a five-year bond at 30 basis points.
The latest deal is the largest US dollar-denominated bond by China in over four years. China raised $2 billion in a dollar bond last year, which was issued to Saudi Arabia. After ordering 2 shipments of soybeans from the US, the Communist country is now eyeing the dollar bond. The developments come after the Beijing-Washington trade truce.
In addition, China cut its 24% retaliatory tariffs on US goods but kept the 13% tariffs on soybeans. The Xi Jinping administration is holding the whip on soybeans to keep the White House in check. American farmers will still find it expensive to ship their goods to the Communist nation. The Trump administration is already under pressure from farmers to sort out a deal.
China is the world’s top agricultural buyer, and the US farmers depend on the country to sell their soybean produce. After Trump imposed tariffs, China began procuring soybeans and other agricultural produce from Argentina and Brazil. After the US dollar bond, we will have to wait and watch if China slashes the soybean tariffs.
Trade tensions between the US and China have eased significantly after the recent talks in South Korea. Both sides had tough negotiations, and the Xi Jinping administration is the only one that brought the White House officials to the table for talks.