(Yicai Global) July 3 -- The Chinese mainland and Hong Kong have launched a long-awaited "Bond Connect" scheme on Monday. Bond Connect will give international investors access to USD9 trillion Chinese onshore bond market, Moody's, the international credit ratings agency, said in its latest report.
It is a milestone in the internationalization of the yuan because it will greatly enlarge the pool of investable assets denominated in yuan as global investors will be able to hold and trade more yuan-denominated assets, says Moody's in its report issued today.
The rising internationalization of the Chinese onshore bond market, to be facilitated by the Bond Connect, will equip onshore bonds for inclusion in more global bond indices, Moody's pointed out.
Moody's expects that northbound inflows to the onshore bond market will grow gradually in the next 12 months. At the same time, there will be more significant growth in northbound flows as the credit agency expects more international bond indices to include or increase allocations in Chinese onshore bonds one year after the implementation of Bond Connect.