Lenovo Group said on Wednesday it would issue $2 billion worth of zero-coupon convertible bonds to Alat, and had signed a collaboration agreement with the Saudi Arabian company to set up a manufacturing facility there.

The world's largest maker of personal computers has become the latest Chinese firm to join a rush in Asia to raise capital through convertible bonds.

Last week, Alibaba Group decided to raise about $4.5 billion via sale of convertibles and JD.com announced a $1.5 billion convertible bond sale plan.

Lenovo said in a filing that the initial conversion price of the bonds is HK$10.42 per share and they will be convertible to nearly 1.50 billion shares after three years.

The issuance proceeds will be used for repaying existing debt and for other general works, Lenovo said.

Under the agreement with Alat, Lenovo will also establish a regional headquarters in the Middle East and a manufacturing facility in Saudi Arabia to increase its geographic diversification.

This comes as China and the Middle East deepen economic cooperation in recent years, to the concern of the United States, which has long been the core security partner of the Gulf Arab states.

Saudi Arabia has a nascent manufacturing industry, and to build its own, it is partnering with foreign firms, including from China, to develop capabilities and manufacturing lines in the kingdom.

With a new headquarters in Riyadh, Lenovo aims to generate demand from the region and focus on research and development, while the manufacturing facility will focus on producing initially personal computers and servers for the Middle East.

Alat was launched this year to help make Saudi Arabia a global centre for electronics and advanced industries.

(Reporting by Ayushman Ojha; Editing by Subhranshu Sahu)