Exciting News: China's Credit Bond ETF Repo Pilot Program is About to Make Waves!

Key Points

China’s Credit Bond ETF Repurchase Business Pilot Program is set to officially launch soon, according to industry insiders on May 26, 2025.
This program, greenlit by CSDC (中国证券登记结算有限责任公司), allows eligible credit bond ETFs to be used as collateral in exchange-traded general collateral repo transactions.
To be eligible, credit bond ETFs must have a scale exceeding ¥2 billion RMB ($280 million USD).
The pilot is expected to broaden financing channels, enhance capital utilization efficiency and secondary market liquidity, boost the attractiveness of credit bond ETFs, and potentially lower corporate financing costs.

Get ready, because China’s game-changing Credit Bond ETF Repurchase Business Pilot Program is gearing up for an official launch very soon, and it’s set to inject some serious dynamism into the market.

We’ve got the inside scoop – on May 26, 2025, industry insiders revealed to China Securities Journal (Zhongguo Zhengquan Bao 中国证券报) that this innovative pilot is on the horizon.

What does this mean for you? Several credit bond ETFs, handpicked by public fund management companies and meeting specific criteria, will soon be formally included in the eligible collateral pool for exchange-traded general collateral repurchase (repo)
transactions.

The Genesis: CSDC’s Green Light

This whole move kicked off back on March 21.

That’s when the China Securities Depository and Clearing Corporation Limited (CSDC) (Zhongguo Zhengquan Dengji Jiesuan Youxian Zerengongsi 中国证券登记结算有限责任公司) dropped the “China Securities Depository and Clearing Corporation Notice on Matters Related to the Pilot Program for Credit Bond Exchange-Traded Fund Products to Conduct General Collateral Repo Business.”

Catchy name, right?

Essentially, this notice was the official nod, permitting eligible credit bond ETF products to dive into the exchange-traded general collateral repo business on a pilot basis.

As you can imagine, following this announcement, a slew of public fund management companies eagerly threw their hats in the ring, applying for their credit bond ETFs to be approved as collateral in these repo transactions.

Key Impact Areas of the Pilot Program

Broaden Financing Channels
Improve Capital Utilization Efficiency & Secondary Market Liquidity
Boost Attractiveness of Credit Bond ETFs
Expand Demand for Credit Bond Allocation
Lower Corporate Financing Costs

What’s the Bar for Entry? Size Matters.

So, what makes a credit bond ETF “eligible” for this exclusive repo club?

According to the CSDC’s notice, there’s a key financial benchmark:

Credit bond ETFs must have a scale exceeding ¥2 billion RMB ($280 million USD) to be considered as collateral for repo business.

Data from Wind already shows a few heavy hitters meeting this requirement. Keep an eye on these names:

Ping An Company Bond ETF (Ping’an Gongsizhai ETF 平安公司债ETF)
E Fund Company Bond ETF (Yifangda Gongsizhai ETF 易方达公司债ETF)
Harvest Fund Credit Bond ETF (Haifutong Xinyongzhai ETF 海富通信用债ETF)

Understanding “Bond General Collateral Repo”

Harvest Fund Management (Haifutong Jijin 海富通基金) breaks down bond general collateral repo nicely for us.

Think of it like this:

A funding borrower pledges eligible bonds.
They then get financing based on the value of these pledged bonds (calculated using a specific haircut rate – basically a discount to account for risk).
Both parties agree that when the repo period matures, the funds will be returned, and the pledged bonds will be released.

This type of pledged repo is a cornerstone of financing in China’s bustling bond market. It’s all about keeping the wheels of capital moving efficiently.

The Big Upside: Why This Pilot Program is a Big Deal

Li Yishuo (Li Yishuo 李一硕), General Manager of the Fixed Income Special Strategy Investment Department at E Fund Management (Yifangda Jijin 易方达基金), sheds light on the significant benefits this program brings to the table.

It’s not just a minor tweak; it’s a strategic move with ripple effects:

Broader Financing Channels: It opens up new avenues for investors in the exchange market to get funding. More options, more flexibility.
Improved Capital Utilization Efficiency: This move is set to enhance how efficiently capital is used, leading to better secondary market liquidity. Think smoother, faster transactions.
Boosted Attractiveness of Credit Bond ETFs: Making these ETFs eligible for repo makes them more appealing to investors. This is a win for the ETF market.
Expanded Demand for Credit Bond Allocation: With increased attractiveness comes increased demand for credit bonds themselves.
Lower Corporate Financing Costs: Ultimately, this can help reduce the cost of borrowing for companies, fueling growth and investment.

This pilot program isn’t just about a new financial instrument; it’s about enhancing market depth, improving liquidity, and potentially lowering costs across the board.

It’s a smart step towards a more robust and efficient financial ecosystem.

We’ll be watching keenly to see how China’s innovative Credit Bond ETF Repurchase Business Pilot Program unfolds and delivers on its promising potential.