Offshore trading volume up 43%
Offshore trading volumes up 43% month-on-month
Offshore trading volume of China issuers
Source: Bloomberg TAGG <GO>; TRACE and MIFID data
Chengtou issuers had the biggest spread wideningDomestic bonds saw lower volatility in June as China's State Council vowed to expand infrastructure investment without flooding the economy with stimulus or over-printing. The bond universe's average option-adjusted spread (OAS) for fixed-rate medium-term notes stayed flat across most rating buckets and sectors, except the real estate sector saw spread widening by 9 bps, compared to end-May. In the chengtou sector (local government financial vehicles), certain issuers suffered from mark-to-market volatility risk as traders reviewed China's stance on backing state-owned enterprises after the quasi state-owned developers Greenland's bond extension. We believe chengtou issuers will continue to be supported by provincial governments on new infrastructure projects, and default risk is unlikely to spread across the sector.
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 June
Source: FIW@CN <GO>, Bloomberg Intelligence
