New version of the China Interbank Bond Market Handbook (2023) (2024)

FAQs

What is the bond market in China 2023? ›

China's bond market issuances total 71 trillion yuan in 2023. BEIJING, Jan. 29 -- Bond issuances in China totaled 71 trillion yuan (about 10 trillion U.S. dollars) in 2023, up 14.8 percent year on year, according to data from the central bank.

Operationally, Bond Connect is based offshore, while CIBM Direct is based onshore. CIBM Direct gives greater access to opportunities in onshore markets in terms of a wider range of counterparties you can deal with, and also access to a wider range of products, like repos and interest rate swaps.

Panda Bonds are onshore renminbi-denominated bond issued in People's Republic of China by non-Chinese entities. Panda Bonds are issued as a capital-raising plaform for foreign countries or companies targeting Chinese investors.

Thus, China does not appear to have been a crucial buyer of Treasury securities for the past year or so. Of course, China could sell off some of its enormous reserves of U.S. Treasury securities. It currently owns almost 10% of the total Treasury debt held by the public.

The Morningstar Emerging Markets Composite Bond Index gained 9% in 2023, though the bulk of that performance came during the last quarter, mostly due to declining inflation rates and a weakening dollar. Some top developing-markets managers enjoyed continued success in 2023. Those that stood out include Bronze-rated T.

The China 10-Year Government Bond currently offers a yield of 2.321%. This yield reflects the return investors can expect if they hold the bond until maturity. Government bond yields are critical indicators of economic confidence and investor sentiment.

Since the U.S. dollar has a variable exchange rate, however, any sale by any nation holding huge U.S. debt or dollar reserves will trigger the adjustment of the trade balance at the international level. The offloaded U.S. reserves by China will either end up with another nation or will return back to the U.S.

Range: 2.325 to 2.34.

"Dim sum bond' is a slang term for bonds denominated in Chinese renminbi and issued in Hong Kong.

Why is it called panda bond? ›

Named after China's national symbol, panda bonds are debt instruments that offer global companies, governments and international institutions the opportunity to raise funds in China, while also benefitting from cheaper funding costs as a result of China's low interest rates.

The key difference lies in the market where they are issued. Foreign entities issue Panda bonds in mainland China, allowing them to tap into the domestic RMB market. In contrast, Dim Sum bonds are issued in Hong Kong by entities outside mainland China.

The total value of China's onshore RMB bond market reached USD 15.5 trillion at the end of 2020, and many market participants are expecting the market to grow significantly in the coming years.

2021 reaffirmed the benefits of investing in China government bonds (CGBs), with yields largely insulated from coordinated moves in global bond markets. The recent dovish policy shift in China has made the case for CGBs even more compelling, in our view.

Since the U.S. dollar has a variable exchange rate, however, any sale by any nation holding huge U.S. debt or dollar reserves will trigger the adjustment of the trade balance at the international level. The offloaded U.S. reserves by China will either end up with another nation or will return back to the U.S.

The benchmark interest rate in China was last recorded at 3.45 percent. Interest Rate in China averaged 4.29 percent from 2013 until 2024, reaching an all time high of 5.77 percent in April of 2014 and a record low of 3.45 percent in August of 2023.