what is bond lending

the so-called bond lending refers to the bond financing behavior that the bond acquirer borrows the underlying bonds from the bond lender with a certain amount of bonds as collateral, and at the same time agrees to return the borrowed underlying bonds at a future date, and the bond lender will return the corresponding pledges.

Scope of application of bond lending

At present, the bond lending business is limited to the inter-bank bond market, and the exchange market has not yet been launched. The participating institutions include commercial banks, securities companies, credit cooperatives and fund companies.

term of bond lending

the term of bond lending shall be determined by both parties through consultation, but the longest term shall not exceed one year.

the role of bond lending

for bond lenders, bond lending can revitalize existing assets and provide additional income for investors who hold bonds due without changing asset allocation; For bond investors, credit bonds can be pledged in exchange for interest rate bonds to carry out pledged repurchase, which can improve financing efficiency and reduce financing costs. At the same time, they can also directly short or cooperate with treasury bonds futures for basis trading and carry trade arbitrage.

the difference between bond lending and buyout repurchase

bond lending is to obtain the required bonds in the form of pledge bonds, and the bond borrower needs to pay a certain fee to the integrated party; Buy-out repurchase means that the buyer is financing by selling bonds to the reverse repo, and it needs to pay a certain fee to the reverse repo.