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China bond market rallies amid improving sentiment
2018/08/06 03:10:24
China, bond, Treasury

Aug 06, 2018 (China Knowledge) - Last week, China’s bond market rose sharply with the treasury interest rate falling by an average of 11 bps. The AAA and AA corporate bond interest rates fell by an average of 18 bps and 19 bps. The Urban Construction Investment Bond yields slid by an average of 18 bps, and the convertible bond index dipped by 1.11%.

A credit analyst of Everbright Securities said that currently market sentiment has improved, but the tightening regulatory trend is still intact. Rate notes are again chased by investors these days because of loosening monetary condition with mounting trade war uncertainty.

The 10-year Treasury interest rate reversed the previous week's rebound, falling by 6 bps from 3.52% on July 27 to 3.46% on August 3.

Affected by short-term liquidity, 1-year Treasury interest rates fell even sharper, from 2.90% on July 27 to 18 bps to 2.72% on August 3.

As market sentiment improved, the yield of credit bonds gradually declined, and the credit spreads gradually narrowed.

From July 30 to August 3, the yield of credit bonds declined significantly. The yield of CSI AA+ 5-year industrial bonds fell from 4.69% on July 27 to 4.52% on August 3. The yield of CSI AA+ 5-year city investment bonds fell from 4.78% on July 27 to 4.58% on August 3.

At the same time, the median credit spread of all industrial bonds fell from 145.3 bps on July 27 to 134.0 bps on August 2, and the credit spread median of all city investment bonds slid to 207.7 bps on August 2 from 225.2 bps on July 27.

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