China Yield Curve Steepest in 13 Months as Muni Debt Saps Demand
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China’s 1.77 trillion yuan ($285 billion) of planned municipal bond sales this year is damping demand for longer-term sovereign notes, bringing about the steepest yield curve in more than a year.
The premium investors demand to hold 10-year government securities over one-year debt was 122 as of 4:30 p.m. in Shanghai, according to National Interbank Funding Center prices. That’s the widest gap since April 2014. The yield on the notes due April 2025 has risen 11 basis points to 3.46 percent this month, while that on the debt maturing April 2016 fell 47 basis points to 2.24 percent.