As China bonds go global, dealers size up demand for swaps

China’s onshore derivatives market must grow quickly to meet the hedging needs of foreign investors

Foreign investors are expected to purchase $150 billion of Chinese bonds

The inclusion of onshore China bonds in global fixed income indexes is expected to provide a boost to the country’s still embryonic interest rate swap market.

On April 1, Bloomberg began adding Chinese government bonds to its global investment grade debt benchmark, the Bloomberg Barclays Global Aggregate Index. Over the next 20 months, hundreds of mainland bonds will be added to the index and this is expected to draw another $150 billion of offshore money into the nation’s bonds, which will in