China secondary bond market:

Offshore and onshore volumes continue to fall

Offshore trading volumes started to increase in January

• Offshore trading volume of Chinese issuers dropped sharply to $8.4 billion in February. The most liquid issuers are IG names such as Alibaba and Bank of China.
• 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 (in millions of dollars)

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

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Onshore trading volumes lowest since March 2021

• Onshore trading volume of Chinese issuers dropped to the lowest in February since March 2021.
• Onshore trading volume was 520 million in February 2022, 92% of which is IG.

Onshore trading volume of China issuers (in millions of dollars)

Source: BQNT <GO>, Global Data

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Bond yield and index change
Domestic bonds were immune to the recent real-estate contagion as the bond universe's average option-adjusted spread (OAS) for fixed-rate medium-term notes tightened by 9 basis points year-to-date for all rating buckets and sectors. AA rated "chengtou" (local-government owned entities for urban development projects) issuer Benghu Gaoxin (BHHNIV) saw more than 400 basis points of spread widening in its medium-term note. Even with the wider spread, the issuer's 7.8% 2024 maturity (102103203.IB) was still traded at par as of end-February.

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