I think the interest is 3% (before commission) per year. Say there is 3% RMB appreciation in 2 years, then the total gain in 2 years will be:
3% + 3% + 3% = 9% in 2 yrs, or 4.5% per year on average.

Remember u have to hold the bond for 2 yrs' time, otherwise u may sell at a discount. And I don't think it is easy to sell the RMB bond, or not as liquid as the other USD bonds.

Not attractive.

But if u have much RMB on hand which has no use and only earning bank interest, then OK.

In theory, the bond's coupon value will decrease when the interest rate increase. But in practical, it is not always true.

This bond has a very short duration of 2 yrs. The coupon value has very slow response when the China government changing the interest rate.

Also, if there is much demand for this kind of bond, then we should go to the very fundamental of supply and demand, the coupon value may not decrease due to the interest rate increase. And indeed, I was looking for USD bond for longer term in the last 2 years, but the bankers told me that the coupon value was not decreasing althought the US Federal Reserve increased the interest rate 0.25% continously. The market had much demand for USD bonds.

But anyway, if u hold the RMB Bond for 2 years, it will give u back 100% coupon value at maturity plus interest. If u are not selling b4 maturity, then no need to take care of the changing in the interest rate.

However, u can wait for another new RMB Bond after the China gov't increase the interest rate. The new bond should have higher than 3% interest rate then.

引用:

原帖由 ngaiso 於 2007-7-2 22:47 發表
I have one question, it is highly probable that the People Bank will increase the interest rate.  That means bond price will decrease.  When considering this factor, seems not attractive to me.