Belt and Road bond ETF debuts on SGX opening China interbank access

Panda bonds from BRI partner countries and multilateral development banks are eligible.

The Singapore Exchange (SGX) has listed the first Belt and Road Bond Index ETF, giving investors access to a diversified portfolio of Belt and Road-related renminbi (RMB) bonds through a single SGX-listed instrument.

Managed by CGS International Securities Singapore Pte. Ltd., the CGS-ICBC-CFETS Belt and Road Bond Index ETF tracks an index of RMB-denominated bonds linked to the Belt and Road Initiative (BRI) from China’s interbank bond market.

The BRI is a development and economic cooperation initiative launched by China in 2013 to promote regional connectivity, trade and investment.

The fund raised approximately $57m during its initial offer period.

“Previously, overseas investors who wanted to invest in China’s interbank bond market typically had to be qualified institutions,” said Xue Jun, president of China Galaxy Securities.

“From today, investors in Singapore can hold a portfolio of onshore RMB bonds related to the BRI through a single listed product, traded in Singapore dollars or renminbi,” he added.

Eligible bonds include Panda bonds issued by BRI partner countries or multilateral development banks, bonds with “Belt and Road” in their full name or stated use of proceeds, and bonds issued to finance trade.

The index also includes up to 10 Export-Import Bank of China bonds, drawn from its five newest issues and its five most-traded bonds in the previous month.

All bonds must be denominated in RMB and carry a CFETS implied credit rating of AA+ or above. Bonds from the Exim Bank are capped at 20% of the index, and those from any other single issuer at 10%.

CGS International said it intends to pay distributions twice a year, around June and December, at its discretion.

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