More than a year following China’s decision to widen foreign investors’ access to its interbank bond market, things are starting to fall into place. China’s inclusion in the Emerging Markets Government Bond Index and such other indices as the Asian Government Bond Index and the Asia-Pacific Government Bond Index is a positive development that promises more foreign inflows.
In the G3 market, Chinese issuers account for the lion’s share of primary activity as local government financing vehicles join government and private corporates in issuing bonds. Chinese issuers now account for up to 60% of the total market activity worth over US$200 billion a year. Analysts expect more Chinese issuers will debut in the international market in the next few years.
China’s activity in both the onshore and offshore bond markets reflect the country’s rising stature in the global financial markets. There is increasing interest in China’s bond markets among foreign investors. For now, foreign investment accounts for less than 2% of China’s US$9.5 trillion onshore bond market. An understanding of Chinese issuers and the onshore market is vital for any global fixed income manager planning to invest in China. While opportunities abound, the challenges around investing in the country often are quite complex. The weakening of the renminbi, concerns around credit ratings, recent corporate defaults and a general lack of clarity about the inner workings of the onshore bond market have slowed efforts of global investors to access China’s debt market.
Now on its 11th year, the Asian Bond Markets Summit is the definitive fixed income event in Asia that draws the largest participation of issuers and institutional investors. Organized in association with the Asian Development Bank, the Asian Bond Markets Summit is a part of Asean Bond Markets Initiative especially in deepening the development of Asia’s bond markets.
Speakers / Agenda
09.00 Opening remarks
Daniel Yu, Editor-in-Chief, The Asset
09.10 Morning keynote address
Noritaka Akamatsu, senior advisor of sustainable development & climate change department, Asian Development Bank
09.30 Panel: Open access – Overcoming challenges, unlocking opportunities
The China Interbank Bond Market (CIBM) scheme that provides foreign investors direct access to China’s onshore bond market is shaping the global investment landscape. But concerns around credit ratings, defaults, and the weakening renminbi are making it difficult for global investors to access the CIBM.
10.40 Panel: The black and white of panda bonds
The revival of the panda bond market, fuelled by the opening of the CIBM, promises to give foreign issuers access to renminbi-denominated assets. However, regulatory uncertainties and a general lack of clarity on rules have slowed activity. What must be done to shake the pandas out of their stupor?
11.20 Panel: The rise of LGFV bonds
Local governments with massive funding requirements are increasingly tapping the international capital market and are driving the growth of the LGFV bond market. This trend is likely to continue as the central government eases rules and encourages offshore issuance. Despite relatively higher yields offered by LGFV bonds, Chinese investors remain the major buyers.
14.00 Afternoon keynote address
14.20 In conversation: China Belt & Road – how Asia’s bond markets can support?
China’s Belt and Road Initiative has a long list of projects that require massive funding. The bond markets are a potential source of funds for infrastructure projects that should deepen ties between China and trading partners in Asia, the Middle East and Europe. How can the Asian bond markets support China’s Belt and Road journey?
15.00 In focus: The China securitization market
China’s securitization market is getting a major boost as regulators push for alternative funding tools. Asset-backed securities (ABS), residential mortgage-backed securities (RMBS) as well as collateral loan obligations (CLOs) are common financial securities in China. Going forward, the securitization market is poised for growth as deals involving non-performing loans increase and rules around Public Private Partnerships (PPP) are relaxed. China is allowing PPP project proponents to tap the securitization market to raise capital. How will the market evolve in the next 12 months?
15.20 Panel: Green bonds – China leading the way
Across the globe, climate change is high on the government agenda. State policy supporting environment-friendly projects are helping to fuel the growth of the green bond market.
Last year, China led the green bond issuance in Asia Pacific. With China’s firm commitment to green finance, the country is expected to retain its spot as the biggest green bond issuer this year. Across Asia, countries including
Indonesia, the Philippines and South Korea are also active in the green bond market.
16.00 Closing remarks
Daniel Yu, Editor-in-Chief, The Asset
17.00 End of summit & cocktails