China Bond Rally Seen Withstanding Muni Debt Issuance Surge
- Local governments set to issue $47 billion of bonds this week
- Central bank may inject more funds to back issuance, OCBC says
This article is for subscribers only.
A rally in Chinese sovereign debt is likely to withstand a surge in local government bond issuance this week, thanks to an abundance of funds available for investors to use.
The yield on 10-year government notes has fallen 19 basis points from this year’s high to 3.25%. That’s close to the lowest since April 2. Some 328 billion yuan ($47 billion) of local government bonds will be issued this week, the most this year, data compiled by Bloomberg showed. Despite the large issuance, demand for sovereign bonds should remain strong because the central bank is expected to inject more cash into the financial system, according to Oversea-Chinese Banking Corp.