Chinese Banks Face Liquidity Struggle as Key Funding Cost Rises
- Yield on one-year NCDs jumped to highest since June this month
- Deposit base erosion, stock market rally have added pressure
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Chinese banks are under increased funding pressure, an unintended consequence of increased monetary easing efforts that fueled a stock rally and cut demand for debt products.
The yield on one-year negotiable certificates of deposit sold by AAA rated banks, a popular bond-like fundraising tool for lenders, rose to the highest since June earlier this month, before edging lower in recent days, Bloomberg data show. Its premium over the seven-day repurchase agreement rate, a money market benchmark, is hovering near its widest since February.