Market Summary

Yield Movements

The People's Republic of China;s (PRC) local currency (LCY) government bond yield curve rose for most tenors between 2 September and 31 October on expectations of an increased bond supply as the government enacted stimulus measures. A decline in the yield curve at the shorter end of the curve wwas seen due to monetary easing by the People's Bank of China. Yields rose for longer tenors following expectations of higher bond supply over fiscal stimulus measures.

Local Currency Bond Market Size and Issuance

LCY bonds outstanding in the PRC grew at an accelerated pace in the third quarter (Q3) 2024 on increased government bond issuance to reach CNY149.7 trillion at the end of September. Total LCY bonds outstanding grew 3.1% quarter-on-quarter (q-o-q) in Q3 2024, up from in the previous quarter's 2.2% q-o-q growth. Total bond sales in the PRC for Q3 2024 tallied CNY13.9 trillion, with q-o-q growth slightly down to 18.5% from the prior quarter's 21.3% due to a high base effect as both the central government and local governments continued to issue bonds to help support the domestic economy.

Sustainable Bond Market

The PRC has the largest sustainable bond market in the region, with a size of USD356.3 billion at the end of September, representing 39.9% of the emerging East Asian total. Due to limited public sector participation, sustainable bonds in the PRC tend to be shorter-term instruments, with 87.8% of the PRC's sustainable bonds having tenors of 5 years or less.