Eurobond’s US$15 trillion market offers Chinese issuers a path to global investors

The US$15 trillion Eurobond market could offer Chinese issuers a gateway to international investors and greater flexibility as their funding needs grow, according to executives at clearing house Euroclear.

The Eurobond market, the world’s third-largest debt market after the US and China, allows companies and governments to raise capital outside their home markets and currencies, without necessarily being tied to Europe or the euro.

“The Eurobond market is highly international and flexible, enabling issuers to target the foreign investors they want and broaden their access to global capital,” Euroclear group CEO Valerie Urbain said in an interview with the Post. “In the current geopolitical context, maintaining interoperability between different pools of liquidity remains extremely important.”

Eurobonds typically offered longer maturities than domestic markets and allowed issuance in 55 different currencies and under 80 legal regimes, Urbain said.

They could free up China’s domestic capital for other purposes while diversifying Chinese issuers’ fundraising channels amid their increasing projects overseas, added Philippe Laurensy, the Brussels-based clearing house’s Asia-Pacific CEO.

“The majority of investors in the Chinese bond market are Chinese,” he said. “While China is capable of meeting the growing funding needs of companies and governments, foreign capital enables the country to channel domestic funds to other purposes.”

Eurobonds, which were internationally recognised, would enhance investors’ familiarity and confidence in Chinese corporate issuers, he added.