Email of the day (2)
Comment of the Day

August 04 2011

Commentary by Eoin Treacy

Email of the day (2)

on Chinese sovereign bonds:
"I wonder whether you can enlighten me a little bit on China. Do they have long-term riskless bonds issued by the government? How do I find the maturity dates and the yields-to-maturity? If not, is there such a thing as long-term riskless interest rates in China, and what are their levels now? Long-term meaning more than say 20 years.

"And finally, what is the trailing dividend yield currently on the FTSE China 25 Index? Is this information readily available publicly?

"Many thanks for all the help. I must say I have enjoyed the Fullermoney website service to-date."

Eoin Treacy's view Thank you for your kind words and these questions which others may also find of interest. There are Chinese government bonds denominated in Renminbi but they do not tend to be very liquid. I think the longest dated go out to 15 years. Whether you could consider them "riskless" is a matter for discussion but the Chinese government definitely has more in reserve than just about any other nation. Yields do not tend to be particularly high since the government has a relatively low cost of capital. This list of bonds currently in the yield curve suggests that the highest yield is on the 10 year at 4.11%. It is now possible to open Renminbi denominated accounts via branches of China Bank internationally and also via HSBC in Singapore among others.

The trailing dividend yield on the FTSE Xinhua China 25 Index is 2.64% and the P/E is 10.83.

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