Getting on the Southbound "Bond-wagon"

Southbound Bond Connect scheme is the market access arrangement between financial infrastructure institutions in mainland China and Hong Kong SAR that allows mainland investors to invest in overseas bonds through the Hong Kong market.

Recently Southbound Bond Connect scheme has witnessed a significant growth in trading volume. The key driver behind the growth is the low CNY financing cost at a time when the interest rate for US dollar has reached historic high levels. Another important contributing factor is the possibility of offering structured products through Southbound Bond Connect. 

Given the increasing popularity of Southbound Bond Connect scheme, we have prepared a bulletin to recap the key features of this scheme which may be of relevance to issuers and managers.