Overseas Investors Anticipate 'Debt Connect' Scheme to Further Open China's Bond Market
Yicai Global
/SOURCE : Yicai
Overseas Investors Anticipate 'Debt Connect' Scheme to Further Open China's Bond Market

(Yicai Global) Sept. 8 -- After the success of China's panda bonds, overseas investors are now hoping China will roll out a 'debt connect' scheme to further open the country's bond market.

This should be the next task following the launch of the Shanghai-Hong Kong Stock Connect, Mr. Spencer Lake, vice chairman of global banking and markets at HSBC Bank Plc., said at the China-International Capital Market Integration Roundtable in Shanghai on Sept. 6.

A record CNY15.5 billion (USD2.33 billion) of panda bonds were issued by domestic and foreign institutions in China's interbank bond market last year, according to central bank data, thanks to a relaxation in policy.

Onshore Chinese yuan financing costs have also become lower than offshore yuan financing costs, prompting more overseas institutions to issue panda bonds. The panda bond market should continue to have great prospects, Mr. Zhou Rongfang, general manager of the Shanghai Clearing House, said.

The People's Bank of China is looking into how to create new paths to open up the bond market under the existing framework, including some technical connectivity issues with Hong Kong's bond market, Mr. Zhou disclosed.

'Panda Bonds' are Chinese yuan-denominated bonds issued by international financial institutions in China.

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