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Moody's: Opening of China's onshore & offshore bond markets propels cross-market activities

Moody's released the "Renminbi Bonds Monitor" on Tuesday, highlighting the latest developments in the renminbi bond market, as well as in the Chinese economy more generally.

Key Points:

Moody's Investors Service says that the launch of the Bond Connect program in July 2017 and simplification of cross-market bond issuance procedures is the primary reason for increasing investments by international investors in China's onshore bond market and also offshore USD issuance by Chinese issuers this year.

Ivan Chung, a Moody's Associate Managing Director, noted: "These increasing cross-market activities have also accelerated the rapidly diminishing role of the offshore RMB bond market in connecting onshore and offshore market participants."

"In the first nine months of 2017, new issuance in the offshore RMB bond market continued its declining trend, falling to RMB27 billion, which is only 21% of the annual issuance for 2016, thereby reducing the supply of offshore RMB bonds to international investors," said Chung.

"On the other hand, according to China Central Depositary and Clearing Company, in the first three quarters of 2017, foreign investors' holdings of onshore RMB bonds increased by RMB117 billion to almost RMB900 billion," Chung added.

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