China studies linking bond markets with Hong Kong, SCMP reports

[HONG KONG] China is studying linking the nation's bond markets with Hong Kong, giving foreign investors access to the world's third-largest debt market, the South China Morning Post reported.

A state-backed clearing house for the nation's interbank note market told regulators and industry groups it was interested in a "bond connect scheme," the newspaper said, citing people it didn't identify.

More than 93 per cent of bonds in China are traded in the interbank market, with the trust holding 28.8 trillion yuan (US$4.6 trillion) of outstanding debt in its custody in November, the newspaper said. A connection would further expand access to China's capital markets and promote the use of the yuan after a trading link between the Hong Kong and Shanghai stock exchanges was started last November.

Hong Kong's Treasury Markets Association has submitted a proposal, the newspaper said, citing a person at a foreign bank's trading desk. The Asia Securities Industry & Financial Markets Association, which represents more than 70 banks, asset managers and law firms, is also working on a proposal, SCMP said.

BLOOMBERG