China secondary bond market:

Offshore trading volumes down 32%

Offshore trading volumes down 32% month-on-month

• Based on MIFID and TRACE data, China offshore bonds' total trading volume was $6.8 billion in July, down from $10 billion in June. Real estate issuers like Country Garden and Kaisa Group were traded more actively in July than June.
• TAGG <GO> provides a display of aggregated post-trade volumes for fixed-income securities, to show market direction and liquidity.

Offshore trading volume of China issuers

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

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Chengtou issuers  spreads tightening on ample interbank liquidity
Domestic bond spreads tightened in July on expectations the PBOC would keep interbank liquidity ample due to the economic slowdown. The domestic bond universe's average option-adjusted spread for fixed-rate medium-term notes tightened 5.2 basis points on average for all rating buckets and sectors. By China's local rating buckets, AAA tightened 5.1 bps, AA 4.6 bps, and non-rated bonds 5.7 bps. By sector, consumer staples tightened 15 bps while health care widened 1.4 bps. Chengtou issuer spreads tightened 5.3 bps and we believe may this continue to be supported by regional governments as China pushes infrastructure investment to spur the economy.

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

China domestic bonds' spread change in July

Source: FIW@CN <GO>, Bloomberg Intelligence