HSBC facilitates first SBF trade for an offshore investor in the CIBM
10 October 2023 China
Image: Pixels Hunter
HSBC has facilitated the first standardised bond forward (SBF) trade for an offshore investor in the China Interbank Bond Market (CIBM).
The trade means that HSBC is the first onshore bond settlement agent to enable foreign investors to complete such a transaction.
The first trade was placed by the overseas funds of Singapore-headquartered investment manager Dymon Asia in a transaction designed to support liquidity management and risk hedging for its onshore interbank bond market investments.
Since their introduction, SBFs have continued to steadily develop, says HSBC. SBFs have helped investors fulfill their diversified trading strategies and hedge against their holdings of policy bank bonds issued by China’s state-owned policy banks, it adds. This includes the China Development Bank and the Agricultural Development Bank of China.
Policy bank bonds accounted for 21.8 per cent of foreign investors’ total bond holdings in China’s interbank bond market at the end of August 2023, second only to China government bonds, which accounted for 65.6 per cent.
Rafael Moral Santiago, global head of country management, Securities Services at HSBC, says: “We are pleased to lead the way in facilitating the use of innovative risk management solutions for foreign investors as they increasingly look to put their China onshore bond positions to work.
“Through the ready-made nature of standardised instruments, we can more quickly and cost-effectively manage client interest rate risk and liquidity needs in response to changing market conditions.”
The trade means that HSBC is the first onshore bond settlement agent to enable foreign investors to complete such a transaction.
The first trade was placed by the overseas funds of Singapore-headquartered investment manager Dymon Asia in a transaction designed to support liquidity management and risk hedging for its onshore interbank bond market investments.
Since their introduction, SBFs have continued to steadily develop, says HSBC. SBFs have helped investors fulfill their diversified trading strategies and hedge against their holdings of policy bank bonds issued by China’s state-owned policy banks, it adds. This includes the China Development Bank and the Agricultural Development Bank of China.
Policy bank bonds accounted for 21.8 per cent of foreign investors’ total bond holdings in China’s interbank bond market at the end of August 2023, second only to China government bonds, which accounted for 65.6 per cent.
Rafael Moral Santiago, global head of country management, Securities Services at HSBC, says: “We are pleased to lead the way in facilitating the use of innovative risk management solutions for foreign investors as they increasingly look to put their China onshore bond positions to work.
“Through the ready-made nature of standardised instruments, we can more quickly and cost-effectively manage client interest rate risk and liquidity needs in response to changing market conditions.”
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