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China Money Rate Climbs to Two-Week High on Minsheng Debt Sale

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March 15 (Bloomberg) -- China’s money-market rate climbed to the highest level in almost two weeks as China Minsheng Banking Corp. started selling convertible bonds, boosting demand for capital.

The Beijing-based lender plans to raise 20 billion yuan ($3.2 billion) in the sale that began today, according to a statement published March 12. Guotai Junan Securities Co. estimated the issuance will lock up 450 billion yuan of capital before funds are returned to unsuccessful bidders from March 20.

“The pressure from Minsheng sale will probably ease next Wednesday,” said Liu Junyu, a bond analyst in Shenzhen at China Merchants Bank Co., the nation’s sixth-biggest lender.

The seven-day repurchase rate, which measures interbank funding availability, climbed 27 basis points to 3.36 percent as of 4:39 p.m. in Shanghai, according to a weighted average rate compiled by the National Interbank Funding Center. It touched 3.41 percent earlier today, the highest since March 5. The rate rose 88 basis points this week.

The People’s Bank of China withdrew 44 billion yuan of capital from the financial system this week selling repurchase contracts, a fourth weekly withdrawal, according to data compiled by Bloomberg. The central bank hasn’t issued reverse-repurchase agreements, which add funds to the financial system, since Feb. 7.

The one-year swap contract, the fixed cost needed to receive the floating seven-day repurchase rate, was unchanged at 3.28 percent, according to data compiled by Bloomberg. The rate rose six basis points from March 8.

The yield on the 3.15 percent government bonds due January 2018 gained one basis point to 3.30 percent, according to the Interbank Funding Center. The rate rose three basis points, or 0.03 percentage point, this week.

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