The bond market in the China Free Trade Zone has recently become hot, and the scale of bond issuance throughout the year is expected to reach a record high.

According to Bloomberg, assembly data shows that as of Tuesday (March 14), this year, the scale of bond issuance from the trade zone increased to 29.2 billion yuan (RMB, the same below, S $ 5.694 billion).It is close to the total amount of 35.6 billion yuan last year.In addition, the market's average yield of bonds this year is about 4.6%, which is much higher than the 4%yield of RMB bonds in the country, becoming a major cause of attracting investors.

The free trade zone bond market, also known as the "Pearl Debt", has not performed well in the past, and the circulation has always been very sluggish.However, in the fourth quarter of last year, this debt issued by this "offshore market on the shore" was significantly capnted, which mainly benefited from the cost of overseas US dollar bonds to maintain high levels and limited domestic financing, which driven more and more Chinese -funded enterprises to turn to the turn of the steering.The free trade zone bond is used as an alternative option.

Senior San Pengyuan senior researcher Shi Xiaoshan pointed out that the average financing cost of bonds in the free trade zone has risen significantly since the fourth quarter. In addition to the imbalance of RMB supply and demand, the impact of credit risk premiums has also gradually strengthened.She said that new financing difficulties in some enterprises are greater. The free trade zone bonds are currently not much financing options. Even if the cost is high, the issuer can accept it.Data provided by the rating company show that more than 60 % of the free trade zone bonds have been issued by the Urban Investment Corporation since this year.

Lu Yao, director of the fixed income of Hanya investment in Shanghai, pointed out: "Especially for the urban investment that has the demand for re -financing for US dollar bonds this year, the issuance of the free trade zone debt is preferred." The free trade zone bonds. "Investors are small, and their yields are usually higher than that of 20 to 50 basis points in domestic bonds.

The Bond of the Free Trade Zone is a offshore bond issued to the Shanghai Free Trade Zone and overseas investors.The first free trade zone local debt was issued by the Shanghai Finance Bureau in 2016. The first free trade zone corporate bond was issued in 2019. At present, most of the existing bonds are denominated in RMB.In addition, the free trade zone debt is mainly settled through the central settlement company, which is different from overseas dim sum bonds and US dollar bonds via international systems such as EUROCLEAR.

David Yim, the head of the capital market of Standard Chartered China and North Asia, said: "If the issuer does not care whether bonds can be widely subscribed and whether they can trade in the secondary market, then the free trade zone debt may be quiteSuitable for them. "

From the perspective of demand, bond investors in the free trade zone are mainly based on Chinese banks' free trade zoning agencies and overseas branches, and they often adopt their holding strategies.In order to attract more overseas investors, Shi Xiaoshan of Sino -C Secort Pengyuan suggested to improve the risk management tools, increase the liquidity of the secondary market, and at the same time increase the main body of medium and high -level debt issuance, and expand the supply of high -quality people.

In addition to urban investment companies, the recent bond market of the free trade zone has also attracted more diverse debt issues.Silver Leasing Management Hong Kong Co., Ltd. issued 2.4 billion yuan of RMB bonds at the end of last year, with a ticket interest rate of 2.9%.

David Yim said, "When you start to see the main body of bonds frequently issued in the offshore market to the free trade zone, it means that you have to pay more attention to this market."