CICC Credit Bond Yield Tracker: Third Batch of Amortized-Cost Bond Funds Filed; Incremental Credit Demand May Persist
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CICC's weekly credit bond tracker reviews trading around China's National Day holiday. In rates, post-holiday primary issuance rebounded on higher net treasury supply while the secondary market moved in a narrow range; 10-year and 30-year CGB yields each rose 1bp. Credit primary issuance recovered to RMB117.1 billion with improved net financing, and secondary credit yields fluctuated narrowly, leaving percentiles across all ratings and tenors at or below 1% of history. Institutional net buying generally declined over the holiday, while credit ETF AUM rose sequentially. Accommodative funding and successive amortized-cost fund launches are channeling incremental demand into credit, reinforcing fundamental support. With a third batch of amortized-cost bond funds now filed, position-building demand should persist through mid-November, keeping credit demand robust. CICC expects credit yields and spreads to remain at low levels, with scope for marginal compression. For allocation, it recommends institutions hold non-financial credit bonds at around the five-year point.
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