Offshore investors are driving Swap Connect volumes toward 1 trillion yuan as demand for yuan debt hedging surges. BNP Paribas Securities (China) and ANZ project monthly trading could reach about 1 trillion yuan, topping the March record of 820.8 billion yuan. With 95 institutions now participating, the platform is gaining traction as a route into China's bond market amid waning appeal for US and Japanese debt.

Xing Zhaopeng, senior China strategist at ANZ, points to low hedging ratios and rising interest-rate risks as catalysts for further demand. Wei Li at BNP Paribas estimates volumes could breach the 1 trillion yuan mark in the second half of the year. Global funds rely on Swap Connect to lock in fixed rates and shield onshore holdings from benchmark volatility.

Beijing is expanding hedging tools for international investors through Swap Connect, bond futures access, and planned offshore contracts in Hong Kong. Kevin Fan of HKEX views sustained additions of three-plus new participants monthly as realistic, aiming to reinforce Hong Kong's role as a gateway for yuan-denominated assets.