China Shibor Declines to 10-Month Low on Easing Speculation

Chinese banks’ borrowing costs dropped to the lowest level in 10 months on speculation the government will spur the economy with more easing measures.

The finance ministry sold at least 30 billion yuan ($4.8 billion) of seven-year bonds at an average yield of 3.39 percent, according to a trader at a finance company that participates in government debt auctions. That compared with the 3.41 percent median estimate in a Bloomberg News survey of nine fixed-income analysts and traders. A government report may show on April 13 China’s economy grew 8.4 percent in the first quarter, the least since June 2009, according to a Bloomberg survey of economists.

“The market is expecting more easing measures will come out as the economy slows,” said Guo Caomin, a bond analyst at Industrial Bank Co. in Shanghai.

The Shanghai interbank offered rate that banks charge each other for three-month loans has fallen 63 basis points, or 0.63 percentage point, this year to 4.84 percent, the lowest level since June 2011, according to a daily fixing compiled by the National Interbank Funding Center. It declined one basis point today.

The one-year swap contract, the fixed cost needed to receive the floating seven-day repurchase rate, rose one basis point to 3.20 percent as of 5:46 p.m. in Shanghai, according to data compiled by Bloomberg.

The People’s Bank of China didn’t gauge demand for bill sales today, a sign it won’t issue such securities tomorrow, according to a trader at a primary dealer required to bid at the auctions. The monetary authority has refrained from selling three-month and one-year bills since Dec. 22 and Dec. 27, respectively.

The seven-day repurchase rate, which measures interbank funding availability, rose eight basis points to 3.78 percent, according to a weighted average rate compiled by the National Interbank Funding Center.

The yield on the 3.65 percent government bond due October 2018 dropped two basis points, or 0.02 percentage point, to 3.40 percent, according to the Interbank Funding Center.

--Judy Chen. Editors: Andrew Janes, James Regan

To contact Bloomberg News staff for this story: Judy Chen in Shanghai at xchen45@bloomberg.net.

To contact the editor responsible for this story: James Regan at jregan19@bloomberg.net

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