China to issue 600 bln yuan of special T-bonds

Updated 2017-08-29 10:00:38 CGTN/Agencies

Bill rollover will not affect liquidity in banking sector: PBOC

China is preparing to roll over a massive 600 billion yuan ( billion) worth of special Treasury bonds this week in a carefully choreographed operation designed to minimize impact on its stressed money market.

The unusual sale is a belated consequence of the way the country's sovereign wealth fund, China Investment Corp (CIC), was set up 10 years ago.

At the time, the central government raised 1.55 trillion yuan via eight special Treasury bond offerings in order to capitalize on CIC. The first of these bonds is now coming due.

The refinancing comes amid tight liquidity concerns in the domestic bond market, sparking worries that the enormous amount of supplies will make matters worse.

Those worries were eased, however, after the Ministry of Finance (MOF) confirmed that the bonds would be privately allocated to a group of banks, with the People's Bank of China (PBC) as the ultimate investor, rather than being offered in the public market.

The MOF said that it would place 3.6 percent seven-year and 3.62 percent 10-year notes with designated banks on Tuesday to refinance the maturing 600 billion yuan 4.3 percent 10-year special bonds.

The central bank will then buy all the bonds on the same day from the lenders involved.

"The market had been worried that the MOF might have opted for a more market-based approach, selling notes via auction to a broader set of market participants. This would have soaked up liquidity," said a Shanghai-based rates trader. "The clarification reassured the market that the impact would be almost zero."

The PBOC said in a statement that the rollover of the special Treasury bonds will not crowd out the primary or secondary market and will not affect liquidity in the banking sector.

The MOF did not disclose which banks would buy the special bonds.

Also in the News

Nicole Kidman Recalls Oscar Glory: Loneliest Time
Showbiz2016/06/16 13:58February 20 2019 04:59:05

Nicole Kidman Recalls Oscar Glory: Loneliest Time

Attending Shanghai International Film Festival, Nicole Kidman talks about her role in "Grace of Monaco".

Labor Day Travel Peak Starts
Also in the News2014/05/01 12:16February 20 2019 04:59:05

Labor Day Travel Peak Starts

Johnny Depp Delivers a Speech 'Evolve the Future' in 'Transcendence'
Also in the News2014/04/18 13:18February 20 2019 04:59:05

Johnny Depp Delivers a Speech 'Evolve the Future' in 'Transcendence'

Hollywood star Johnny Depp's speech in the upcoming new film "Transcendence" has been disclosed on Friday, April 11th.

China World Business Sports Showbiz Audio
C4 My Chinese Life The Sound Stage China Revealed Showbiz Video Travel Video
China World Fun Travel Entertainment Sports
Beijing Shanghai Guangzhou
Live Music Opera & Classical Movies Traditional Shows Exhibitions
Learn Chinese:
Chinese Studio Living Chinese Everyday Chinese Just For Fun Chinese Culture Buzzwords