Central Huijin Investment Ltd., a subsidiary of China’s sovereign wealth fund known for stabilizing the stock market through equity purchases, has hit a milestone by issuing a record 207 billion yuan ($29 billion) in bonds this year. This marks the highest annual debt issuance since the firm first entered China’s onshore credit market in 2010.
The latest issuance includes 9 billion yuan in three-year bonds and 15 billion yuan in five-year bonds, according to sources familiar with the matter. This surge in debt sales comes as China’s equity markets have seen a notable rally. Stimulus measures have driven a 23% gain in the country’s onshore stock market over the past month, although some of these advances have tapered off recently. During tougher times earlier this year, Central Huijin intervened by purchasing exchange-traded funds (ETFs) to support market stability.
In the first half of 2024, Huijin reported a 388% increase in its holdings of trading assets, a category that typically includes securities intended for resale, bringing its total to 581.8 billion yuan.
Proceeds from the most recent bond sale will be used to optimize Huijin’s debt structure, replenish working capital, and address other regulatory-approved needs, according to its bond offering documents. The fund has not publicly commented on the debt issuance, and its parent company, China Investment Corp., currently holds no outstanding bonds.
The bond sales have likely been advantageous for Huijin, with the average coupon rate of its yuan-denominated bonds this year hovering around 2.2%, the lowest in the firm’s history. Meanwhile, the CSI 300, a major benchmark index, has surged about 15% year-to-date.
In a related move to bolster market liquidity, the People’s Bank of China (PBOC) recently introduced a swap facility, allowing institutional investors to access liquidity for stock purchases. The PBOC reported that applications for more than 200 billion yuan have already been submitted for the program.
