Subscribers

China corporate debt yields hit by collateral rule

Clearing house disqualifies higher-risk issues from being used for bond repurchase agreements

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.

The CSDC said that, with immediate effect, corporate bonds with a AAA credit rating and corporate bonds issued by firms with a rating of AA or above could be used.

Analysts estimated that the change would exclude some 500...

BT is now on Telegram!

For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes