The LCC Index is the first global index to capture investment-grade corporate bonds in China, bolstering transparency and accessibility into the country’s credit markets.
Bloomberg has announced the launch of the Bloomberg Barclays Liquid China Credit (LCC) Index, designed to track the liquid, tradable portion of the yuan-denominated credit bond market.
The announcement comes during the final month of a 20-month phase-in of China government and policy bank securities into the flagship Global Aggregate Index, which began in April 2019.
The LCC Index has been created using the rules of the Bloomberg Barclays China Aggregate Index, but also selects securities based on a combination of CFETS (China Foreign Exchange Trade System) trade volumes and issuer ratings from the three major global rating agencies.
Bonds are included in the LCC Index if they have traded on at least 10 percent of the business days over the past three months and have at least CNY 250 million in aggregate trading volume over that period.
Using data as of 30 October 2020, the LCC Index contained 125 securities across 48 issuers.
“With government and policy bank securities now fully phased into the Global Aggregate Index, the LCC Index is an important step towards establishing broader transparency and accessibility into China’s credit markets,” said Steve Berkley, CEO of Bloomberg Index Services Ltd.
“We expect that this new index will help market participants better understand the attributes of China’s credit market. Investors and asset managers can use it numerous ways, including in product launches, derivative contracts, and traditional benchmarking.”
In early November, Bloomberg will be the first global index provider to complete China’s inclusion into its flagship index, the Bloomberg Barclays Global Aggregate Index, marking a milestone in the investability of this important bond market.
Chinese securities now represent about 6 percent of the index, and local currency Chinese bonds will be the fourth largest currency component after the dollar, euro and yen.