The central banks of China and Hong Kong on Sunday said non-mainland investors can start trading Chinese corporate bonds in a trial beginning on Monday, confirming a calendar entry that appeared on the "Bond Connect" programme website late on Friday.
Trading will initially be "Northbound", so mainland investors will be not yet be able to buy and sell Hong Kong-listed debt.
The announcement coincides with the 20th anniversary of the resumption of Chinese rule in Hong Kong, and marks China's latest measure to open up its capital markets. The Bond Connect follows similar stock-trading programmes between the Shanghai and Shenzhen stock exchanges and their Hong Kong counterpart.
Standard Chartered's John Tan, head of financial markets for Greater China and north Asia, said China's $9 trillion bond market is the world's third-largest yet is relatively undersold to foreign investors.
"The launch of the Bond Connect marks the strong commitment of the Chinese government to further open up its markets," Tan said in emailed comments. "We are positive that the scheme will be well-received by the market and report good momentum when it is launched."
The Bond Connect means more global debt indices will include Chinese bonds in the foreseeable future, Tan said.
To mark the launch of Bond Connect, the China Development Bank said it planned to issue up to 20 billion yuan ($2.95 billion) worth of one-year, three-year and 10-year fixed-rate bonds for tender beginning on Monday.
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