China 5-Year Swap Drops to Lowest Since November on Growth Woes

China’s five-year interest-rate swaps fell to the lowest level since November on speculation a recovery in the world’s second-biggest economy will stall.

The nation’s gross domestic product increased 7.7 percent in the first quarter from a year earlier, slower than the 7.9 percent growth in the previous three months, the National Bureau of Statistics said on April 15. The People’s Bank of China sold 43 billion yuan ($7 billion) of 28-day repurchase contracts, which withdraw cash from the financial system, according to a trader required to bid at the auctions.

“The five-year swap is soft on the back of weak growth,” said Frances Cheung, strategist at Credit Agricole CIB in Hong Kong. “It takes time for the market to get used to below-8 percent growth in China.”

The five-year swap contract, the fixed cost needed to receive the floating seven-day repurchase rate, declined one basis point to 3.52 percent as of 4:30 p.m. in Shanghai, according to data compiled by Bloomberg. It touched 3.49 percent earlier, the lowest level since Nov. 22.

The seven-day repurchase rate, which measures interbank funding availability, dropped nine basis points to 2.90 percent, according to a weighted average rate compiled by the National Interbank Funding Center.

— With assistance by Judy Chen

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