China's Bond Auction Sees Record Demand Amid Global Instability
Business
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Moneycontrol•21-01-2026, 16:26
China's Bond Auction Sees Record Demand Amid Global Instability
- •China's seven-year government bond auction on Wednesday drew record demand, with a bid-to-cover ratio of 5.91, the highest ever for this tenor.
- •Investors are using Chinese sovereign debt as a hedge against global instability, driven by its low correlation with external markets.
- •Global risks include US tariff threats against European countries over Greenland and a slump in Japanese bonds.
- •Abundant liquidity in China's onshore market and low funding costs are also supporting demand for sovereign bonds, particularly shorter-tenor debt.
- •The yield on the seven-year bond in the secondary market dropped to 1.69% after the auction, its lowest this month.
Why It Matters: China's government bond auction saw record demand, highlighting its role as a safe haven amid global risks.
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