IHS Markit and CBPC open up China’s bond market with new onshore indices


By Shobha Prabhu-Naik.

Business information provider IHS Markit has launched new onshore Chinese bond market indices, which it claims are the first international, independent fixed income benchmarks using China Bond Pricing Center (CBPC) pricing data. The new iBoxx ChinaBond indices have been launched in alliance with CBPC, a subsidiary of China Central Depository and Clearing Co (CCDC) which is a pricing provider for the world’s third largest fixed income market.

As the administrator of the indices, IHS Markit will apply globally-recognised methodologies and maintain them in compliance with the International Organization of Securities Commissions (IOSCO) and European Benchmark Regulation (BMR) standards.

“Partnering with CBPC allows us to develop bond market indices that are unique for their ability to draw on domestic China market data and expertise,” said Shane Akeroyd, president of IHS Markit Asia. “We are confident that we are offering the strongest benchmarks for the onshore Chinese bond market. Bringing our iBoxx methodologies and independence to China will help mutual funds, ETFs [exchange traded funds] and international investors access this large and growing market.”

The first set of indices, the iBoxx ChinaBond Government & Policy Banks Bond Indices, capture the performance of the government and government agency segment of the Chinese domestic bond market. Together, these issuers represent about one quarter of the Chinese bond market. 48 sub-indices by issuer type, issuer and maturity complement the headline index.

Last year, the Chinese government introduced the China Interbank Bond Market (CIBM) Direct and Bond Connect to make it easier for foreign investors to access its bond market. Over 300 offshore financial institutions have invested through the CIBM Direct program with offshore investors holding 1.75 trillion RMB of Chinese bonds at the end of August 2018.

Bai Weiqun, chief supervisor of CCDC and Chairman of CBPC stated that “As more international investors see opportunities in China, there is a growing need for new and reliable benchmarks, and we are delighted to provide fund managers with these valuable tools for accessing one of the world’s fastest growing markets.”

©TheDESK 2018