Chinese banks slash USD bond exposure to 85%

Banks are increasing bond investments in the Euro and likely the AUD, said BofA.

Chinese banks are expected to continue expanding their external bond investment portfolio on the back of the low yield environment onshore, said Bank of America (BofA) Global Research.

The share of USD bonds in Chinese banks’ external bond investment portfolio had declined to 85% in end Q3 2025 from 93% as of end-2024, according to data from the State Administration of Foreign Exchange (SAFE).

Meanwhile, the pace of increase on bond investments in the Euro and other foreign currencies has been “quite sharp” in the first three quarters of 2025, BofA said in report published on 13 February 2026. The majority of these are likely AUD, it added.

Chinese banks are estimated to hold $298b as of Q3 2025.

In late 2025, Chinese banks were reported to have ramped up their bond investments, which grew at a compound annual growth rate (CAGR) of 13.5% between 2021 to 2025, said UOB Kay Hian.