From the margins: CGBs vie to join the collateral club

Can CGBs emulate US Treasuries as initial margin on cross-border derivatives trades?

The lunar year of the tiger is just around the corner. For the Chinese government bond (CGB) market, it could be an auspicious sign. Heightened international interest in CGBs includes speculation about their potential to join US Treasuries and select other sovereign bonds as a major source of collateral for cross-border derivatives trades.

“Central banks have been buying [CGBs] for some time, and asset managers are going to be doing the same,” says William Shek, head of credit and rates at HSBC

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