China Development Bank bond yields rose nearly 30 basis points at market open on Tuesday, traders said, as the market reacted to new corporate bond market restrictions announced on Monday afternoon.
The benchmark government bond future contract also reacted, sliding over 1 percent in morning trade.
China’s official bond clearing house surprised traders when it clamped down on the corporate bond market on Monday, excluding about 500 billion yuan ($81 billion) worth of corporate bonds from being used for bond repurchase agreements.
The move follows other measures to crack down on fixed income trade, in particular higher-risk debt issued by low-quality issuers, and is likely to further spur the migration of capital out of fixed income into Chinese stock markets, which have exploded in recent months as money as moved from real estate and wealth management products into shares.
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