Published 14:27 IST, November 21st 2020
China borrows at negative interest rate as Europeans seek to invest in its growing economy
The Chinese government has, for the first time, issued a debt at a negative interest rate in a bond sale that attracted significant investor interest.
The Chinese government has, for the first time, issued a debt at a negative interest rate in a bond sale that attracted significant investor interest. The “Chinese sale”, which is said to be triggered by plunging economy of the west, got final orders of 16 billion euros for the 4 billion worth of bonds to offer, CNN reported. Additionally, it included a 5-year debt priced with a yield of minus 0.152% and the sale of 10-year and 15-year bonds with yields below 1%.
Those who invested in the deal included central banks, sovereign wealth funds and global asset managers spanning Europe, Asia and the United States. European investors alone made up 85% of the 15-year debt and about two thirds of the shorter-dated bonds, CNN reported citing Deutsche Bank. All the European investors battling with faltering interest rates at home, immediately purchased the bulk of their debt, in a bid to invest in only one major economy that was expected to grow this year. In addendum, the deal also served a secondary purpose for the European investors by giving them an exposure to the otherwise reserved Chinese economy.
Chinese economy rises steadily
Global monetary organisations are seeking to increase their investments in the Chinese economy- the sole system which is expected to grow amid the pandemic. As per Associated Press, the country’s economy sustained a steady recovery in October, with manufacturing, service industry and investment continuing to grow and market demand improving. The total value added of the industrial enterprises above the designated size grew by 6.9 percent year on year in October, or up by 0.78 percent compared to the previous month. In addendum, the index service production also grew by 7.4 percent year on year, up by 2.0 percent in September.
"The steady recovery of the economy has maintained and the scope of the economic growth is expanding," said Fu Linghui, Spokesperson of National Bureau of Statistics spaeaking to AP.
Image: AP
Updated 14:26 IST, November 21st 2020