Interest in China’s sovereign debt market surged in 2020 as international investors hedged against a global volatile market in equities and declining U.S.Treasury yields, with losses driven in part by the coronavirus crisis. Increasing foreign investment in Chinese government bonds rose in tandem with the rising volume of issuances by the Ministry of Finance throughout the year.
Foreign holdings of China’s treasury debt surged to a record 1.88 trillion RMB ($287 billion) as of end-December. China issued its first bond with a variable interest rate tied to a key benchmark (dubbed “DR”) in December, joining other major economies in reforming its benchmark rate framework as it tries to improve transparency on pricing.
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