(Yicai Global) Nov. 5 --Bloomberg has launched a new indexthat is aimed at tracking the liquid and tradable part of the yuan-denominated credit bondin China’s interbank bond market.
The global business and financial information provider unveiled itsBloomberg Barclays Liquid China Credit Index today after completing the inclusion of Chinese bonds in the Bloomberg Barclays Global Aggregate Index earlier this month.
Bonds must meet the criteria of the Bloomberg Barclays China Composite Index and a number of other requirements to be included. The issuer must have gained an investment grade from at least one of the world’s three major rating agencies; the bonds, when included, must have more than a year to mature; the notes must have traded on at least 10 percent of business days over the past three months and have at least CNY250 million (USD37.72 million) in total trading volume over that period.
The frequency of the LCC Index’s rebalancing is once a month, while new eligible bonds rebalance quarterly.
The issuance of credit bonds is solely based on the credit of the issuer and not secured by collateral. As of the end of August, the balance of the Chinese bond market was CNY111.9 trillion (USD16.88 trillion), according to central bank data. Of that, the custody balance of corporate credit bonds was CNY25.4 trillion. The custody balance is equal to the balance of bonds issued but not yet matured.
Yuan-based Chinese government and policy bank bonds were added to the Bloomberg Barclays Global Aggregate Index on April 1 last year, with the inclusion completed on Nov. 1 this year. As a result, Bloomberg became the first index provider to wrap up the inclusion of Chinese bonds in a global benchmark. The current weight of Chinese bonds in the index is about 6 percent.
Editor: Peter Thomas