IHS Markit launches iBoxx ChinaBond Indices tracking onshore Chinese bond market

Oct 15th, 2018 | By | Category: Fixed Income

IHS Markit has announced the launch of the iBoxx ChinaBond Indices, a new family of fixed income indices tracking segments of the onshore Chinese bond market.

Shane Akeroyd, President of IHS Markit Asia

Shane Akeroyd, President of IHS Markit Asia.

The first indices to be unveiled are the iBoxx ChinaBond Government & Policy Banks Bond Indices.

This initial range consists of 48 sub-indices by issuer type, issuer and maturity and capture the performance of the government and government agency segments of the Chinese domestic bond market. Together, these issuers represent about one quarter of the Chinese bond market.

According to IHS Markit, the indices were developed to cater to growing demand from foreign investors for more robust benchmarks, as well as a greater range of passive products such as ETFs, referencing the Chinese bond market.

Demand has been buoyed by the introduction by the Chinese government of the China Interbank Bond Market (CIBM) Direct and Bond Connect programmes which have made it easier to access this market.

More than 300 offshore financial institutions have invested through the CIBM Direct programme, and by the end of August 2018, offshore investors held 1.75 trillion RMB of Chinese bonds, according to IHS Markit data.

Foreign demand is expected to further grow over the next decade, as China continues to open its bond market.

The new indices have been created in alliance with ChinaBond Pricing Center (CBPC), a subsidiary of China Central Depository and Clearing (CCDC), the leading pricing provider for the world’s third largest fixed income market.

The indices combine CBPC’s robust pricing data with IHS Markit’s well-recognized iBoxx methodologies and are in compliance with IOSCO and European Benchmark Regulation standards.

IHS Markit’s iBoxx bond indices offer broad benchmarking with a focus on transparency. The rules-based methodologies are publicly disclosed and designed to be replicable, making the indices suitable as the underlying references for ETFs.

“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. “Together, 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 and international investors access this large and growing market.”

“These are the first globally branded onshore Renminbi bond indices, combining iBoxx methodologies with CBPC bond pricing to deliver authoritative performance indicators for investors across the world,” added Bai Weiqun, Chief Supervisor of CCDC and Chairman of CBPC. “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.”

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