(Yicai Global) Oct. 25 -- Chinese telecoms giant Huawei Technologies's first domestic bond issuance, worth CNY3 billion (USD424.4 million), has been oversubscribed by more than three times as investors bet on the low yields to rise as trading starts.
The three-year bonds with a coupon rate of 3.48 percent have been listed today. This is the first of two similarly sized tranches, as per the Shenzhen-based firm's earlier statement. Industrial and Commercial Bank of China is the lead underwriter of the first one and China Construction Bank of the next one.
Last month, Huawei announced its plan to raise money in the domestic market to supplement working capital. Before this, Huawei has issued six bonds overseas, and the latest one in February 2017. Since then, the firm has grappled with tech trade tensions in the US but posted strong earnings this year.
"The low yield of Huawei's bonds was beyond our expectations," a manager of a large public fund told Yicai Global after missing the opportunity to participate. "The yield is expected to rise after trading begins."
"The yield of 3.48 percent is indeed low, equivalent to bonds with a rating of Super AAA," a manager of a large insurance asset management firm said to Yicai Global. The threefold oversubscription puts Huawei into the same league with large state-owned firms, the manager added.
China's 10-year government bond yields rose to 3.241 percent yesterday. Analysts expect that the yields of long-term bonds may break through this year's peak level of 3.4 points due to the central bank's sustained prudent monetary policy.
Editor: Emmi Laine