China secondary bond market:

Offshore volumes fall, onshore volumes up

Offshore trading volumes continue falling

• Offshore trading volume of Chinese issuers continued to be very thin in March. The most liquid issuer was Alibaba Group.
• TAGG <GO> allows a display of aggregated post-trade volumes for fixed income securities, to show market direction and liquidity.

Offshore trading volume of China issuers ($ millions)

Source: Bloomberg TAGG <GO>; TRAC and MIFID data

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Onshore trading volumes increased in March

• Onshore trading volume of Chinese issuers increased slightly in March.
• Onshore trading volume was $1 billion (converted as of issuance date) in March 2022, only 80% of which was IG.

Onshore trading volume of China issuers ($ millions)

Source: Bloomberg Quant Platform (BQuant), Global Data

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Bond yield and index change
Domestic bonds saw higher volatility in March as Yango's recent defaults in yuan-denominated bonds triggered contagion risk concern. The domestic bond universe's average option-adjusted spread (OAS) for fixed-rate medium-term notes widened 17 basis points for all rating buckets and sectors, and 26 bps for the real-estate sector, during March. Dalian Wanda (DALWAN) saw more than 1,300 bps of spread widening in its April 2023 medium-term note.

Use FIW@CN to see the yield change based on local ratings and issuers of China's domestic bonds by sector.

China domestic bonds' YTD spread change

Source: FIW@CN <GO>, Bloomberg Intelligence