China Money Rate Jumps Most in Three Months as IPOs Absorb Funds

China’s benchmark money-market rate jumped by the most since February as new share sales tied up funds.

Guotai Junan Securities Co. said Tuesday it would raise as much as 30.1 billion yuan ($4.8 billion) in China’s biggest initial share sale since 2010. Subscriptions for 25 such offerings are likely to lock up about 6.7 trillion yuan this week, a Bloomberg survey shows. The People’s Bank of China will decide whether to roll over about 670 billion yuan of three-month loans that were extended to banks under its Medium-Term Lending Facility, according to Guosen Securities Co.

“Liquidity continues to be tight given the IPO factor,” said Xu Hanfei, a Shanghai-based analyst at Guotai Junan Securities. “There’s also uncertainty whether the MLF will be rolled over.”

The seven-day repurchase rate, a gauge of interbank funding availability, gained for a seventh day, the longest streak since October. It increased 12 basis points to 2.34 percent in Shanghai, a weighted average from National Interbank Funding Center shows. That’s the highest level since May 5.

The cost of one-year interest-rate swaps, the fixed payment to receive the floating seven-day repo rate, rose five basis points to 2.57 percent, according to data compiled by Bloomberg. That’s the highest since May 7.

China will allow private funds with net assets of at least 10 million yuan to trade in the interbank bond market, a person familiar with the matter said on Tuesday. The move will help strengthen demand for the securities as a surge in municipal debt issuance pushes borrowing costs higher.

The yield on sovereign bonds due April 2025 was little changed at 3.61 percent, National Interbank Funding Center prices show. It climbed 26 basis points since the end of April.

The Ministry of Finance sold 30.05 billion yuan of seven-year bonds Wednesday, according to a statement on the website of China Central Depository & Clearing Co. The yield was 3.48 percent, said a trader at a primary dealer who bid at the auctions.

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