PBOC to gauge debt demand
Source: Bloomberg News |
May 10, 2011, Tuesday
|
Print Edition
Print Edition
CHINA'S central bank was said to ask lenders to show their demand for the first sale of three-year notes in five months, according to two traders at primary dealers required to bid at the auctions.
Banks are required to submit their orders this week, said the traders, who asked not to be identified because the details aren't public. The notes were last issued on November 25 at a yield of 3 percent.
The People's Bank of China lifted banks' reserve requirement ratios four times this year to help contain the fastest inflation in more than two years. The possible resumption of three-year note sales shows the central bank may rely more on open-market operations than reserve ratio hikes to withdraw liquidity, said Shi Lei, the Shenzhen-based head of fixed-income research at Ping An Securities Co, a unit of China's second-largest insurer.
"The move shows three-year bill sales are very likely to be resumed this week," Shi said.
"It's a sign that the central bank is moderating its efforts to drain liquidity. After resuming three-year bill sales, the likelihood of a reserve ratio hike this month will decline.''
The monetary authority has relied on one-year and three-month bills to withdraw liquidity in 2011. A press official at the PBOC, who asked not to be identified, said the central bank had no comment on whether it would resume three-year note sales.
The seven-day repurchase rate, which measures interbank funding availability, dropped 1 basis point to 2.76 percent at the close in Shanghai, according to a weighted average rate compiled by the National Interbank Funding Center.
A government report tomorrow will show consumer prices climbed 5.2 percent in April from a year earlier, compared with 5.4 percent the previous month, according to the median estimate of economists in a Bloomberg News survey.
The PBOC in February published a list of 50 primary dealers allowed to participate in open-market operations, including the Industrial and Commercial Bank of China, the Agricultural Bank of China, the Bank of China, China Construction Bank, China Citic Bank, the Industrial Bank and the Postal Savings Bank of China.
Banks are required to submit their orders this week, said the traders, who asked not to be identified because the details aren't public. The notes were last issued on November 25 at a yield of 3 percent.
The People's Bank of China lifted banks' reserve requirement ratios four times this year to help contain the fastest inflation in more than two years. The possible resumption of three-year note sales shows the central bank may rely more on open-market operations than reserve ratio hikes to withdraw liquidity, said Shi Lei, the Shenzhen-based head of fixed-income research at Ping An Securities Co, a unit of China's second-largest insurer.
"The move shows three-year bill sales are very likely to be resumed this week," Shi said.
"It's a sign that the central bank is moderating its efforts to drain liquidity. After resuming three-year bill sales, the likelihood of a reserve ratio hike this month will decline.''
The monetary authority has relied on one-year and three-month bills to withdraw liquidity in 2011. A press official at the PBOC, who asked not to be identified, said the central bank had no comment on whether it would resume three-year note sales.
The seven-day repurchase rate, which measures interbank funding availability, dropped 1 basis point to 2.76 percent at the close in Shanghai, according to a weighted average rate compiled by the National Interbank Funding Center.
A government report tomorrow will show consumer prices climbed 5.2 percent in April from a year earlier, compared with 5.4 percent the previous month, according to the median estimate of economists in a Bloomberg News survey.
The PBOC in February published a list of 50 primary dealers allowed to participate in open-market operations, including the Industrial and Commercial Bank of China, the Agricultural Bank of China, the Bank of China, China Construction Bank, China Citic Bank, the Industrial Bank and the Postal Savings Bank of China.
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