People's Republic of China: Market Summary
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Market Summary
Yield Movements
The People's Republic of China's (PRC) local currency (LCY) government bond yield curve experienced a bullish flattening between 1 June and 30 August as economic growth slowed and the central bank reduced key interest rates amid low inflation. The PRC's yield decline averaged 18 basis points across all maturities largely due to softening economic growth and subdued inflation. This has led the People's Bank of China to unexpectedly cut a series of interest rates in July.
Local Currency Bond Market Size and Issuance
Growth in the PRC's LCY bond market accelerated in the second quarter (Q2) of 2024 on robust issuance by the government. Total LCY bonds outstanding grew 2.2% quarter-on-quarter in Q2 2024, up from 1.2% quarter-on-quarter in the first quarter, to reach a size of CNY145.1 trillion. The PRC's LCY bond sales rose to CNY11.7 trillion in Q2 2024 due to robust government bond issuance as the government began issuing special long-term Treasury bonds to support stimulus measures.
Sustainable Bond Market
Green bonds comprised 90.0% of total outstanding sustainable bonds at the end of June. Corporate bonds comprise the bulk (93.6%) of the PRC's total sustainable bond market. Corporate issuers tend to issue shorter-tenors compared to the public sector. As a result, 87.0% of the PRC's outstanding sustainable bonds carried tenors of 5 years or less.