Ratings, RMB impair China's bond market

A stabilised currency, improved liquidity and a more mature credit culture are what will attract investment in onshore Chinese bonds, industry sources said.

Pheona Tsang, head of fixed income at BEA Union Investment Management, said the firm’s funds are currently not invested in onshore bonds due to worries over the RMB.

“We are taking a closer look at onshore Chinese bonds as the yields are turning more attractive,” she told FSA. “The key concern is the currency factor.”

When assessing the onshore market, the team will focus on government-backed bonds or listed companies bonds with a large market share in the industry or those that already have offshore issuances, she noted.

According to China's onshore “national scale” bond ratings, 51% of bonds are rated AAA and less than 1% of bonds are at A+ or below, according to BNP Paribas.