The country’s Rmb 18.3 trillion ($2.64 trillion) local government bond market will now be open to retail investors, including wealthy individuals, as authorities continue to push for greater lending and a wider range of opportunities for investors, Caixin reports.
The People’s Bank of China announced the move in a joint statement with the Ministry of Finance and the China Banking and Insurance Regulatory Commission. The government had first committed to making the securities readily available to investors back in March.
The decision has the goal of “enriching the variety of over-the-counter business in the national interbank bond market, meeting the investment needs of residents, and promoting the construction of a multilevel bond market,” the statement read.
Local government bonds have until now only been available to financial institutions that are members of the interbank market, where they are traded. Under the new framework, investors will be able to buy the debt from local bank branches or even online.
To be eligible to buy the bonds, individual investors must earn at least Rmb 500,000 a year, hold over Rmb 3 million in financial assets, and have been investing in securities for two years. Without these prerequisites, only the lowest-risk, lowest-return AAA bonds will be available for purchase.