China Money Rate Climbs to 2-Week High on Minsheng Debt Sale
China’s money-market rate climbed to a two-week high 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 31 basis points to 3.40 percent as of 10:26 a.m. in Shanghai, the highest level since March 5, according to a weighted average rate compiled by the National Interbank Funding Center. The rate climbed 91 basis points this week.
The People’s Bank of China withdrew 44 billion yuan ($7.1 billion) 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, declined one basis point to 3.27 percent, according to data compiled by Bloomberg. The rate rose five basis points in the week.
To contact Bloomberg News staff for this story: Judy Chen in Shanghai at firstname.lastname@example.org