FTZ bonds struggle for survival
When China's free trade zone (FTZ) bond market was launched last December, regulators envisaged it as foreign investors’ fast lane into Chinese fixed income. But one year on, there are doubts over whether the market has a future — only one FTZ bond has been sold, and meanwhile the onshore bond market is enjoying a rapid rise.
The Shanghai Municipal Government sold the first FTZ bond in December 2016, cracking open a market that allowed foreign investors to use offshore renminbi (CNH) to buy bonds in the onshore market. Those deals then paid back in offshore renminbi at redemption.
The pioneering transaction was good news
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