UK-based Insight Investment Management, a subsidiary of US group BNY Mellon, has become the first foreign fund house to register with the new programme for accessing the China interbank bond market (CIBM).
The firm registered six funds* under the scheme with the People’s Bank of China yesterday, which between them plan to invest Rmb2 billion ($303 million) into the $6.7 trillion market. The CIBM – the world’s third biggest fixed income market – accounted for 92% of the $7.3 trillion domestic bonds as of the end of 2015.
The move comes two weeks after China's State Administration of Foreign Exchange set out rules and guidance on capital remittance for the CIBM scheme in late May, as reported. The scheme was launched in February, continuing the rapid opening-up of the mainland capital markets.
Insight specialises in investments for pension funds, so it fits the description of “mid- to long-term investors” that PBoC said would be permitted to access the CIBM. The firm is the third largest manager of UK retirement assets, managing £386 billion ($546 billion) in AUM for pension clients, or 87.8% of its total £440 billion in AUM as of March.
HSBC acts as the settlement agent bank and custodian for Insight under the CIBM programme.
Insight had secured a licence and Rmb1.2 billion quota under the renminbi qualified foreign institutional investor (RQFII) scheme last year.
While foreign managers can access the CIBM without quota controls, RQFII quota is still needed to buy exchange-traded bonds and A-shares. But some managers, such as AllianceBernstein, plan to hand back their bond quotas, in favour of using instead the CIBM programme.
* Insight Total Return Bond Fund, Insight Emerging Market Bond Opportunities Fund, Insight Emerging Market Debt Fund, IIFIG Broad Opportunities Bond Fund, IIFIG Bonds Plus Fund and IIFIG Bonds Plus 400 Fund.