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China interbank bond volume up by 1.45 tn yuan in March

(ATF) China Bond Securities and Shanghai Stock Exchange say the amount of yuan bonds that banks hold in their depository chain increased by 1.4456 trillion yuan to 90.4 trillion yuan in March 2020. This was growth of 1.63%.

In a context of repeated low-interest-rate bond yields, commercial banks and funds increased their bond holdings during the month. Overseas institutions have converted their net holdings to net reductions of 15.9 billion yuan.

Specifically, in March, the net deposits of China Bonds increased by 10.94 trillion yuan to 66.95 trillion, mainly from local government bonds and book-entry treasury bonds. The total amount of bonds held by the Shanghai Clearing House increased by 351 billion yuan to 23.45 trillion yuan. The increase came mainly from medium-term notes and ultra-short-term financing bills.

In terms of bond types, the scale of custody in March for interest-rate debt increased by 529.5 billion yuan. Issues of CDB bonds, government bonds, import and export bonds, and local bonds have all been increased by institutions, and the scale of trusteeship has risen by 212 billion yuan, 270.1 billion yuan, 57.6 billion yuan, and 391.6 billion yuan, respectively. Meanwhile, the scale of trust for agricultural development bonds has decreased by 10.3 billion yuan.

For sub-institutions, the scale of broad fund custody increased by 646.2 billion yuan from the previous month. They mainly increased interest rate bonds and credit bonds. The sum of the monthly increase for holdings of these two was a record high. March saw generalized fund holdings of government bonds, CDB debt into export debt, 80.7 billion yuan of agricultural bonds. Short-term financing was 249.2 billion yuan, 137 billion yuan, 27.8 billion yuan, with reduced corporate bonds of 12.8 billion yuan.

In addition, China Financial Information Network reported that broad fundholders increased holdings of local government bonds by 128.5 billion yuan, but a substantial reduction of 205.5 billion yuan of interbank certificates of deposit.

The scale of custody of major bond types at commercial banks increased by 502.5 billion yuan from the previous month. Overall the allocation of interest rate bonds increased, and the allocation of credit bonds was slightly reduced.

Commercial banks largely increased their holdings of local government bonds and reduced their holdings of ultra-short financing and agricultural bonds in March.

In terms of interest rate debt, commercial banks increased their holdings of treasury bonds, CDB bonds, import and export debts at 179.7 billion yuan, 23.6 billion yuan, and 31 billion yuan respectively. They reduced their holdings of agricultural development bonds by 20.3 billion yuan.

Banks increased holdings in corporate votes by 26.8 billion yuan, and 1.4 billion yuan in corporate bonds. Commercial banks also increased their holdings of local government bonds by 237 billion yuan and interbank certificates of deposit by 57.4 billion yuan.

The scale of custody of major bond types held by overseas institutions decreased by 15.9 billion yuan from the previous month.

The overall allocation of interest rate bonds and the allocation of credit bonds were reduced in the month. In terms of interest rate bonds, overseas institutions increased their holdings of national debt, import and export bonds, agricultural development bonds by 2.1 billion yuan, 1.2 billion yuan, and 5.7 billion yuan respectively. And they reduced their holdings of national development bonds by 700 million yuan.

In terms of credit bonds, overseas institutions respectively reduced their holdings of ultra-short-term financing, short-term financing, and corporate debt by 600 million yuan, 600 million yuan, 400 million yuan. 

Chris Gill

With over 30 years reporting on China, Gill offers a daily digest of what is happening in the PRC.


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