China Money Rate Drops Most Since April After Two IPOs Delayed

China’s benchmark money-market rate dropped the most in eight months as demand for new share sales fell short of estimates, boosting the supply of cash.

Two of the 12 equity offerings scheduled for this week were delayed as the Shanghai Composite Index of stocks climbed to the highest since January 2010 yesterday. The People’s Bank of China usually transfers fiscal funds to local administrations at year-end, boosting cash availability at commercial lenders.

“The delay of two IPOs, couple with the booming secondary market that might have made bets on IPOs less attractive, indicate there are less funds tied up than the market initially thought,” said Wang Qiangsong, an analyst at Nanjing Bank Co. in Jiangsu province. “Meanwhile, the fiscal funds transfers are also helping to boost cash supply at banks.”

The seven-day repurchase rate, a gauge of interbank funding availability, fell 70 basis points to 5.47 percent as of 4:30 p.m. in Shanghai, according to a weighted average from the National Interbank Funding Center. That was the biggest drop since April 4. The rate climbed to 6.18 percent yesterday, the highest since Jan. 20.

The PBOC didn’t conduct any open-market operations today, according to two traders at primary dealers required to bid at the auctions. The central bank rolled over part of the 500 billion yuan ($80 billion) of three-month loans granted to lenders in September, and offered short-term loans last week to boost cash supply, according to people familiar with the matter.

The cost of one-year interest-rate swaps, the fixed payment to receive the floating seven-day repo rate, declined five basis points to 3.33 percent, according to data compiled by Bloomberg. The yield on China’s sovereign bonds due September 2024 fell two basis points, or 0.02 percentage point, to 3.68 percent, prices from the National Interbank Funding Center show.

— With assistance by Helen Sun

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