BEIJING, May 11 (Xinhua) -- Foreign institutions, after reporting merely 4.62 billion yuan net rise of their RMB-denominated bonds under custody in March, saw their outstanding RMB bond holdings up 64.87 billion yuan in April, reported Xinhua-run Xinhua Finance citing data from China Central Depository & Clearing Co., Ltd. (CCDC) Monday.
They added 51.74 billion yuan holdings of Chinese government bonds (CGB) in April, contrary to their CGB inventory reduction in the previous month, and absorbed 6.20 billion yuan holdings of policy bank bonds last month.
By end-April, 65 percent of their overall 3.22 trillion yuan of undue RMB-denominated bonds holdings were CGBs, valued 2.10 trillion yuan, and their policy bank bond holdings stood at 1.00 trillion yuan, showed the CCDC data.
Market watchers attributed foreign institutional buyers' recovered April T-bond purchasing to the widening yield spread between CGB and U.S. T-bonds, saying that the yield spread between Chinese and U.S. 10-year T-bonds has risen to more than 150 basis points (bps) since the start of April by far.
Previously in March, the yield spread between Chinese and U.S. 10-year T-bonds once dropped to 140 bps, which, together with the climbing yields of U.S. T-bonds of other terms, drove foreign investors away from heavily purchasing RMB-denominated bonds.
Under such circumstances, foreign institutions slashed nine billion yuan of China bonds holdings in March, according to calculation based on data from both the CCDC and Shanghai Clearing House (SHCH), one of the central securities depositories in China.
In April, foreign institutions remained active in trading RMB-denominated bonds, with their transactions through Bond Connect, a mutual market access scheme allowing investors from Chinese mainland and Hong Kong to trade in each others' bond markets, reached 5,340 deals and the overall turnover was 519.2 billion yuan, averaging 24.7 billion yuan per day. Compared with others, CGB and policy bank bonds were most actively traded, accounting for 51 percent and 34 percent of the monthly total.
Besides, China Development Bank, an ex-policy bank and Agricultural Development Bank of China, a policy lender, kicked off direct bidding invitation towards global investors for their bond issuance on April 28, marking a step further in opening-up of China's interbank bond market.
CCDC is a national financial market infrastructure which provides a full set of life-cycle services for RMB-denominated bond business. SHCH is the depositary and settlement body of debenture bonds in China. (Edited by Duan Jing with Xinhua Silk Road, duanjing@xinhua.org)
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