In a step toward wooing more overseas investors, China's main publisher of bond market data and London-based IHS Markit announced Friday new indexes that claim to offer more transparency into the world's third-largest fixed income market.
ChinaBond, a subsidiary of state-owned China Central Depository and Clearing, is the main source of pricing data on mainland Chinese bonds. IHS Markit is behind the widely followed iShares iBoxx High Yield Corporate Bond ETF (HYG), PMI reports on economic growth, short interest data and other market-related publications.
The launch of the iBoxx ChinaBond Government and Policy Banks Bond Indexes on Friday comes as China is working to get mainland bonds added to global benchmarks from Bloomberg and Barclays, J.P. Morgan and Citi. Last year, China launched a bond connect that gives international investors access to mainland bonds through Hong Kong. Analysts saw the late August implementation of a real-time settlement system in Bond Connect as a step toward inclusion.
Foreign investment in the $12 trillion mainland Chinese bond market is only about 2 percent, according to IHS Markit. Increasing overseas participation in yuan-denominated assets would help Beijing toward its goal of boosting international acceptance of the Chinese currency, also known as the rmb.
The preparation and publication of the iBoxx ChinaBond indexes marks yet another successful milestone in the efforts of China Central Depository and Clearing and ChinaBond Pricing Center to open up the country's bond market and strengthen the international pricing power of yuan-denominated assets, Bai Weiqun, chief supervisor of the clearing center and chairman of ChinaBond, said in prepared remarks for a Friday afternoon launch event in Shanghai.
Bai added the indexes are the first yuan-denominated mainland Chinese bond indexes with a global brand.