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Shanghai - Chinese lenders’ cost of borrowing from the central bank rose to the highest since July as they competed for cash before a resumption in new share sales next week.
The People’s Bank of China issued 50 billion yuan of three-month treasury deposits at an interest rate of 3.20%, according to a statement on the authority’s website. As much as 1 trillion yuan will be tied up because of 10 initial public offerings (IPO) in the November 30 to December 2 period, according to a Bloomberg survey.
“The speculation that the money market is likely to tighten due to IPOs drove up today’s auction result,” said Chen Long, an analyst at Bank of Dongguan in Guangdong province. “This is the short-term factor that concerns the market.”
Money market
The seven-day repurchase rate, a gauge of funding availability in the financial system, was little changed at 2.28% as of 10:51, according to a weighted average compiled by the National Interbank Funding Center.
The cost of one-year interest-rate swaps, the fixed payment to receive the floating seven-day repo rate, fell one basis point to 2.38%, data compiled by Bloomberg show.
The PBOC auctioned 60 billion yuan of three-month treasury deposits at 3% on August 25, while the interest rate was 2.95% at a similar auction on August 28.
The central bank sold 10 billion yuan of seven-day reverse-repo agreements at 2.25% in open-market operations on Tuesday, matching the amount of maturing contracts.
The yield on China’s government bonds due October 2025 declined two basis points to 3.13%, data from the National Interbank Funding Center show.
