Offshore holdings of China govt bonds hit a record US$337b in July


Holdings of policy financial bonds, issued by China's policy banks, stood at 1.04 trillion yuan, also a record.

SHANGHAI: Foreign investors' holdings of Chinese government bonds (CGBs) touched a record high in July, official data showed, and rose at the fastest monthly pace since April ahead of the bonds' phased inclusion in a major global index.

Offshore holdings of CGBs totalled 2.18 trillion yuan ($337.26 billion) at the end of July, according to data released Wednesday evening by interbank bond market depository China Central Depository & Clearing Co (CCDC).

That was an all-time high, and up 2.3% from a month earlier.

The rise in foreign holdings comes as CGBs are set to be included in index provider FTSE Russell's flagship World Government Bond Index (WGBI) over 36 months from the end of October, a development that is expected to draw billions of dollars into the world's second-largest bond market.

Holdings of policy financial bonds, issued by China's policy banks, stood at 1.04 trillion yuan, also a record. That was up 2.4% from the end of June.

Total foreign holdings of bonds cleared through CCDC totalled 3.38 trillion yuan, up 2.3% from a month earlier.

While Chinese sovereign bond yields slipped in July on expectations of policy easing to support an uneven recovery, the spread between the Chinese and U.S. 10-year yield was barely changed over the course of the month.

The yuan was also stable in July, softening just 0.06% against the dollar.

Additional interbank bond market holdings data from Shanghai Clearing House was not yet available on Thursday morning. - Reuters

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