Products
Platforms
Accounts
Inspiration
About
Support
For institutions
Log in Open account
International
CFDs and forex (FX) are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider. 
Show more
CFDs and forex (FX) are complex instruments and come with a high risk of losing money rapidly due to leverage. 68% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs, FX, or any of our other products work and whether you can afford to take the high risk of losing your money.
Show less
Pick up some extra yield over Chinese sovereigns

Pick up some extra yield over Chinese sovereigns

Trade View 3 minutes to read
Strategic Trade / Buy
Picture of Althea Spinozzi
Althea Spinozzi

Head of Fixed Income Strategy

Summary:  Pick up some extra yield over Chinese Government Bonds without adding risk via the Export-Import Bank of China.

Instrument: Export-Import Bank of China CNY bonds (CND10001PY09)
Price Target: n/a
Market Price: n/a

Background:
The Export- Import Bank of China (Chexim) is one of three policy banks in China. It implements policies to promote the export of Chinese products and services. The bank is the sole provider of Chinese government concessional loans, but it also performs other commercial activities such as providing credit for infrastructure projects andChinese businesses overseas in the industrial and energy fields.

We prefer Chexim to the China Development Bank because its operations are more selective and focused. The past few years have seen the CDB issue a large number of loans to Chinese municipalities, causing its total assets (mainly loans) to soar to more than 15% of China’s GDP.

Now that China is welcoming foreign investment, we can expect these development banks to be under more scrutiny, and for investors to select the one with the heathiest balance sheet. 

Investment 

We believe that the Export-Import Bank of China's senior unsecured notes (3.74% fixed coupon, maturity September 2021) offer an attractive yield of approximately 3.1%. This means that this bond provides an approximatively 50 basis point pick-up over Chinese sovereigns of the same maturity with no additional risk.

In addition, last year saw a change to the taxation rules for Chinese onshore bonds, which now permit a three-year exemption on foreign institutional investors’ withholding tax on interest coming from Chinese onshore investments.

(On this last point, it must be said that insufficient details have been released regarding tax clawbacks on previous investments or tax on investment after the exemption period, thus it would be prudent to check this information with a tax advisor.)
Parameters:

Entry: n/a
Stop: n/a
Target: n/a
Time Horizon: n/a

Minimum piece is 10,000,000 nominal CNY with 100,000 nominal CNY increments. Return objective is primarily repayment and coupon payment.
Export-Import Bank of China
/Content Hub/Images/2019/March/29althea1
Export-Import Bank of China 3.74% September 2021 price since issuance (source: Bloomberg)
Management And Risk Description:
The Chinese financial market is just opening up to foreign investors and liquidity may still be an issue for both sovereigns and supras. The Export-Import Bank of China is closely dependent on the performance of the Chinese economy. Although a default doesn’t presently seem likely as the bank is owned by the state, China is an emerging economy and default is always a risk.

Quarterly Outlook

01 /

  • Upending the global order at blinding speed

    Quarterly Outlook

    Upending the global order at blinding speed

    John J. Hardy

    Global Head of Macro Strategy

    We are witnessing a once-in-a-lifetime shredding of the global order. As the new order takes shape, ...
    Read full article
  • Equity outlook: The high cost of global fragmentation for US portfolios

    Quarterly Outlook

    Equity outlook: The high cost of global fragmentation for US portfolios

    Charu Chanana

    Chief Investment Strategist

    Read full article
  • Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Quarterly Outlook

    Asset allocation outlook: From Magnificent 7 to Magnificent 2,645—diversification matters, now more than ever

    Jacob Falkencrone

    Global Head of Investment Strategy

    Read full article
  • Commodity Outlook: Commodities rally despite global uncertainty

    Quarterly Outlook

    Commodity Outlook: Commodities rally despite global uncertainty

    Ole Hansen

    Head of Commodity Strategy

    Read full article
  • Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    Quarterly Outlook

    Macro outlook: Trump 2.0: Can the US have its cake and eat it, too?

    John J. Hardy

    Global Head of Macro Strategy

    Read full article
  • Equity Outlook: The ride just got rougher

    Quarterly Outlook

    Equity Outlook: The ride just got rougher

    Charu Chanana

    Chief Investment Strategist

    Read full article
  • China Outlook: The choice between retaliation or de-escalation

    Quarterly Outlook

    China Outlook: The choice between retaliation or de-escalation

    Charu Chanana

    Chief Investment Strategist

    Read full article
  • Commodity Outlook: A bumpy road ahead calls for diversification

    Quarterly Outlook

    Commodity Outlook: A bumpy road ahead calls for diversification

    Ole Hansen

    Head of Commodity Strategy

    Read full article
  • FX outlook: Tariffs drive USD strength, until...?

    Quarterly Outlook

    FX outlook: Tariffs drive USD strength, until...?

    John J. Hardy

    Global Head of Macro Strategy

    Read full article
  • Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Quarterly Outlook

    Fixed Income Outlook: Bonds Hit Reset. A New Equilibrium Emerges

    Althea Spinozzi

    Head of Fixed Income Strategy

    Read full article

A compiled overview of Trade Views provided on Home.saxo can be found here (https://www.home.saxo/insights/news-and-research/trade-views/report).

Disclaimer

The Saxo Bank Group entities each provide execution-only service and access to Analysis permitting a person to view and/or use content available on or via the website is not intended to and does not change or expand on this. Such access and use are at all times subject to (i) The Terms of Use; (ii) Full Disclaimer; (iii) The Risk Warning; (iv) the Rules of Engagement and (v) Notices applying to Saxo News & Research and/or its content in addition (where relevant) to the terms governing the use of hyperlinks on the website of a member of the Saxo Bank Group by which access to Saxo News & Research is gained. Such content is therefore provided as no more than information. In particular no advice is intended to be provided or to be relied on as provided nor endorsed by any Saxo Bank Group entity; nor is it to be construed as solicitation or an incentive provided to subscribe for or sell or purchase any financial instrument. All trading or investments you make must be pursuant to your own unprompted and informed self-directed decision. As such no Saxo Bank Group entity will have or be liable for any losses that you may sustain as a result of any investment decision made in reliance on information which is available on Saxo News & Research or as a result of the use of the Saxo News & Research. Orders given and trades effected are deemed intended to be given or effected for the account of the customer with the Saxo Bank Group entity operating in the jurisdiction in which the customer resides and/or with whom the customer opened and maintains his/her trading account. Saxo News & Research does not contain (and should not be construed as containing) financial, investment, tax or trading advice or advice of any sort offered, recommended or endorsed by Saxo Bank Group and should not be construed as a record of our trading prices, or as an offer, incentive or solicitation for the subscription, sale or purchase in any financial instrument. To the extent that any content is construed as investment research, you must note and accept that the content was not intended to and has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such, would be considered as a marketing communication under relevant laws.

Please read our disclaimers:
- Notification on Non-Independent Investment Research (https://www.home.saxo/legal/niird/notification)
- Full disclaimer (https://www.home.saxo/legal/disclaimer/saxo-disclaimer)

Saxo Bank A/S (Headquarters)
Philip Heymans Alle 15
2900
Hellerup
Denmark

Contact Saxo

Select region

International
International
Products & pricing
Platforms
Accounts & service
General
Other
Legal

All trading and investing comes with risk, including but not limited to the potential to lose your entire invested amount.

Information on our international website (as selected from the globe drop-down) can be accessed worldwide and relates to Saxo Bank A/S as the parent company of the Saxo Bank Group. Any mention of the Saxo Bank Group refers to the overall organisation, including subsidiaries and branches under Saxo Bank A/S. Client agreements are made with the relevant Saxo entity based on your country of residence and are governed by the applicable laws of that entity's jurisdiction.

Apple and the Apple logo are trademarks of Apple Inc., registered in the US and other countries. App Store is a service mark of Apple Inc. Google Play and the Google Play logo are trademarks of Google LLC.