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China Five-Year Swap Climbs to Nine-Month High on Recovery Signs

Nov. 22 (Bloomberg) -- China’s five-year interest-rate swaps rose to the highest level since February after a local manufacturing index signaled the first expansion in 13 months.

The preliminary reading was 50.4 for a purchasing managers’ index released today by HSBC Holdings Plc and Markit Economics, compared with a final level of 49.5 for October. Fifty is the dividing line between expansion and contraction. The central bank offered 46 billion yuan ($7.4 billion) of seven-day reverse-repurchase contracts and 43 billion yuan of 14-day agreements, according to a statement on its website.

“The rise in the swap reflects strengthening confidence about growth,” said Liu Junyu, a bond analyst in Shenzhen at China Merchants Bank Co., the nation’s sixth-biggest lender. “The economy is rebounding in the fourth quarter.”

The five-year interest-rate swap, the fixed cost to receive the seven-day repo rate, jumped six basis points to 3.56 percent as of 4 p.m. in Shanghai, according to data compiled by Bloomberg. It touched 5.57 percent earlier, the highest level since Feb. 29.

The People’s Bank of China sold 50 billion yuan of six-month treasury deposits at commercial banks on behalf of the Ministry of Finance at a yield of 4.8 percent, according to a trader required to bid at the sales.

The seven-day repurchase rate, a gauge of interbank funding availability, climbed three basis points to 3.23 percent, according to a weighted average compiled by the National Interbank Funding Center. The yield on the 3.39 percent government bonds due August 2022 rose one basis point, or 0.01 percentage point, to 3.53 percent, according to data from the Interbank Funding Center.

To contact Bloomberg News staff for this story: Judy Chen in Shanghai at

To contact the editor responsible for this story: Amit Prakash at

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