On June 24, 2020, CDB and China Securities Index Co., Ltd. (“CSI”) announced the launch of the CSI 7-10 Year CDB Bond Liquidity Index (the “Index”). The Index will be officially released on July 27. As the first-ever liquidity index of CDB bonds in the market, the Index makes innovative use of bond liquidity index calculation weightings, to better reflect the overall performance of high-liquidity CDB bonds, and to provide valuable investment reference.
The Index takes full consideration of real marketplace conditions of relevant CDB bonds, and reflects changes in interest rates of CDB bonds with key terms to provide a performance benchmark. As the sample bonds tracked by the Index boast high liquidity and are easy to track, the transaction costs and tracking deviations are minimized. The Index is expected to be a sound investment benchmark for CDB bonds, with the residual maturities of sample bonds between 7 and 10 years, which roughly matches those of 10-year treasury futures, and with stable durations which facilitate the management of interest rate risk. The investment instruments that track the Index will be able to satisfy the demand of investors both at home and abroad to invest in Chinese bonds, as more cross-market bond exchange-traded funds (ETFs) will be launched in the future.
According to CDB’s Treasury & Financial Markets Department, CDB fully supports the role of development finance in leading innovation, actively contributing to the building of the bond market. At present, CDB bonds are the most active bond product with the highest trading volumes across the China bond market. In particular, the liquidity of the 10-year CDB bond remains the highest and the bond’s yield curve has become one of the most important bond market benchmarks in China. As of the end of June 2020, CDB had issued in total 20 trillion RMB worth of bonds with its outstanding bonds standing at 9.8 trillion RMB.
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