China Onshore Bond ETF Race Heats Up

Global X, the New York-based exchange traded funds provider known for its unique lineup of income and international offerings, added to its global income profile with the debut of the Global X GF China Bond ETF (NYSEArca: CHNB). The new ETF offers exposure to China’s massive onshore debt market.

The Global X GF China Bond ETF tracks the S&P China Composite Select Bond Index, which is designed to offer exposure to “Chinese sovereign bonds, agency bonds and bonds issued by Central State-Owned Enterprises (CSOEs) denominated in Chinese yuan,” according to S&P Dow Jones Indices.

CHNB’s underlying index only includes bonds with maturities of at least one year but no more than seven years. Included securities must be fixed rate non-zero coupon bonds, according to S&P Dow Jones Indices.

Global X partnered with GF International Investment Ltd. on the new ETF. In addition to the boom in popularity for China’s A-shares, the stocks trading on mainland bourses in Shanghai and Shenzhen, global investors have been craving increased access to China’s substantial onshore debt market. [ETF Issuers Look to Join A-Shares Party]

Issuers’ desire to increase offerings of Chinese onshore debt products is not surprising. Not only is China by far the largest emerging markets bond issuer, but its $1.5 trillion corporate bond market is the world’s largest.