China Bond Market Faces Challenges as Yields Hit Decade Low
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China's bond market shows signs of distress as long-term sovereign yields drop significantly, attracting reduced investor interest in yield-based returns.
China's bond frenzy may be close to fizzling out as yields on long-term sovereign notes are trading at the deepest discount in more than a decade compared to the cost of investors' preferred financing tool.
The yield on 30-year bonds has slumped 10 basis points below the overnight interbank rate this week, marking the biggest discount since December 2013.
Volumes in the repurchase market have also eased, indicating that borrowing money to buy sovereign bonds may no longer be attractive for investors seeking yield-based returns.
