China seems to have decided it is time to revise its debt strategy and get back into the dollar. Next week, the country plans to issue $2 billion in dollar-denominated bonds in Saudi Arabia, marking its first such issuance since 2021. Bloomberg reports this move as "significant," citing information from China’s Ministry of Finance.
After a long hiatus, China and Saudi Arabia are expected to further tap the potential for bilateral economic and financial cooperation. This comes as China’s largest steel producer has doubled its investment in Saudi Arabia and the Saudi sovereign wealth fund has taken stakes in companies such as Lenovo. On the diplomatic front, Chinese Premier Li Qiang promises to help deepen their financial ties to ensure prosperity for both nations.
Experts suggest that China may return to the dollar bond market next year, looking to refinance its debt and play with maturities. If the US Federal Reserve continues to ease its monetary policy, dollar-denominated funding may become more attractive. Interestingly, China issued 2 billion euros of bonds in September, surprisingly in Paris.
It seems that China is poised to conquer the global bond market once again, gradually returning to familiar paths, with the dollar firmly at the center of attention.
