China corporate debt yields hit by collateral rule

Shanghai

YIELDS on benchmark China Development Bank bonds ended a few basis points lower on Tuesday, having risen by 30 basis points at the opening, after investors were alarmed by new corporate bond-market restrictions announced late on Monday.

The China Securities Depository and Clearing Corp (CSDC) surprised traders when it clamped down on the corporate bond market, tightening rules to disqualify higher-risk bonds from being used as collateral for bond repurchase agreements.