March 4, 2020 / 5:30 AM / a month ago

Offshore ownership of Chinese bonds breaks new high

SHANGHAI/HONG KONG, March 4 (Reuters) - Foreign ownership of yuan-denominated onshore Chinese bonds rose to a record high in February after increasing for a 15th consecutive month, according to Reuters calculations using official clearing house data.

International investors owned more than 1.95 trillion yuan ($281.39 billion) of Chinese bonds last month, numbers released by China Central Depository and Clearing Co (CCDC) on Tuesday evening showed. That marked a monthly uptick of 3.4%, the fastest since last November.

The holdings included a record 1.34 trillion yuan of government bonds, up 2.3% month-on-month. It was the fastest gain since November and marked the 12th straight month of increases.

Offshore ownership of policy bank bonds also hit a record at 536.41 billion yuan, up 6.8% from January, marking the biggest rise since July 2019.

Additional holdings data from Shanghai Clearing House was not yet available on Wednesday. Bonds cleared there have accounted for about 15% of total foreign holdings in recent months. It does not clear government or policy bank bonds.

Foreign flows into China’s bond market have been supported by the 20-month phased inclusion of Chinese government and policy bank bonds in the Bloomberg Barclays Global Aggregate Index, which began last April.

On Feb. 28, JPMorgan started adding Chinese government bonds in its Government Bond Index Emerging Markets (GBI-EM) series over 10 months. China is also on the watchlist to join FTSE Russell’s World Government Bond Index in March. ($1 = 6.9299 Chinese yuan renminbi) (Reporting by Andrew Galbraith; Writing by Noah Sin; Editing by Simon Cameron-Moore)

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