Market Summary

Yield Movements

The local currency (LCY) government bond yield curve in the People's Republic of China (PRC) fell between 2 February and 29 May on the People's Bank of China's easy monetary policy stance. While the central bank has not yet adjusted policy rate, it has ensured ample liquidity in the financial markets through other tools.

Local Currency Bond Market Size and Issuance

The PRC's bonds outstanding rose 2.6% quarter-on-quarter (q-o-q) to reach CNY179.2 trillion at the end of March, largely due to an expansion in government bonds resulting from front-loading by local governments to help support the economy. Overall bond issuance was flat, growing only 0.3% q-o-q as the 19.4% q-o-q increase in government bond issuance was offset by the 22.7% q-o-q corporate bond issuance decline as financial bond issuance was curtailed over a delay in approvals.

Sustainable Bond Market

The PRC's sustainable bond market weakened at the end of March, with the outstanding supply contracting 1.6% q-o-q as issuance declined over the Middle East conflict. By sector, the PRC's largest issuer are financial firms, with a collective share of 47.6% at the end of March, followed by utilities at 15.0%.