International investors dumped a record $35bn worth of renminbi-denominated bonds in the first four months of 2022 as Covid-19 lockdowns hit the country’s currency and rising US yields reduced appetite for Chinese debt.

Foreign investors sold more than Rmb108bn ($16bn) worth of Chinese debt in April, taking net outflows from the country’s renminbi-denominated bond market to a record Rmb235bn for the year to date, according to Financial Times calculations based on data from Hong Kong’s Bond Connect investment programme. That marked the third straight month of net sales.

Soaring interest rates in developed markets, particularly the US, have eroded some of the advantages of holding typically high-yielding Chinese bonds. At the same time, a weakening renminbi, which has fallen almost 5 per cent against the dollar this year as a harsh lockdown of Shanghai stokes concerns about China’s economic outlook, has reduced the value of interest and principal payments for foreign holders of Chinese debt.