HONG KONG, Oct 20 (Reuters) - China has hired 10 banks including Agricultural Bank of China Bank of Communications, and Citigroup for its $2 billion dollar-denominated sovereign bond issue, according to an internal bank memo seen by Reuters on Friday.
Besides Citigroup, other foreign banks hired by the People's Republic of China (PBOC), acting through the Ministry of Finance, for the issue are Deutsche Bank, HSBC , and Standard Chartered, the memo showed.
Bank of China, China Construction Bank , China International Capital Corp, and Industrial and Commercial bank of China will also be working on the transaction.
Due to its scarcity, the bond is expected to see strong investor demand despite downgrades of China's sovereign credit rating this year by S&P Global Ratings and Moody's Investors Service. Both agencies cited increasing risks from the country's rapid build-up of debt.
But the bond sale will test if the rating agencies' actions would increase borrowing costs for institutions in the world's second-largest economy.
China's central bank chief on Thursday issued a warning about asset bubbles in the economy, which looks set to clock its first acceleration in annual growth since 2010, driven by public spending and record bank lending.
The finance ministry said earlier this month that the issue will consist of $1 billion of five-year bonds and $1 billion of 10-year bonds.
Thomson Reuters publication IFR said that the issuance, if completed, would be China's first dollar bond offering since October 2004, and that the sovereign bond will be issued in the second half of this year.
The memo said the banks hired for the bond issuance would arrange a meeting with fixed-income investors in Hong Kong on Oct. 25. (Reporting by Sumeet Chatterjee; Editing by Kim COghill)