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China's money rates mixed on the week, cbank injections offset strong money demand
December 25, 2015 / 5:04 AM / 2 years ago

China's money rates mixed on the week, cbank injections offset strong money demand

SHANGHAI, Dec 25 (Reuters) - China's primary money rates were
mixed for the week as liquidity improved, after the central bank
injected funds via open market operations and extended new credit
via medium-term lending facilities late last week, helping to
offset year-end money demand. 
    "Money market liquidity was better than last week," said a
dealer at a Chinese commercial bank in Shanghai. "Though overnight
and 14-day repos were in relatively high demand."                  
 
    The volume-weighted average rate of the benchmark seven-day
repo traded in the interbank market, considered the best
indicator of general liquidity in China, was 2.3437 percent by
midday on Friday, down 0.73 basis points for the week.
    The overnight rate stood at 1.9177 percent, the highest in
nearly three months, up 11 basis points on the week, while the
14-day repo was at 3.1207 percent, the highest in nearly half a
year, and up 37 basis points on the week. 
    The People's Bank of China injected 30 billion yuan ($4.63
billion) of funds into the banking system this week via open market
operations. It also extended 100 billion yuan of medium-term loans
to 13 financial institutions under a supplementary lending facility
last Friday.  
    As the last batch of eight initial public offerings (IPOs) had
finished issuance over the past week, traders expected easier
liquidity conditions by year-end.
    In the bond market, yields were mostly down, with the benchmark
five-year treasury down 9 basis points on the week to 2.68 percent.
    Spreads were mostly stable. The spread between high-yield and
AAA rated corporate debt in the interbank market, measured by
interbank clearinghouse indices, ticked downward slightly but still
remained close to a nearly four year high. 
    The risk premium on high-yield onshore corporate debt, largely
stable for most of 2015, has widened sharply in recent months
following a series of high-profile defaults and increasing numbers
of small enterprises encountering repayment difficulties.
 
    
 Key money rates at a glance:
  
                  Volume-wei  Previous    Change (bps)
                  ghted       day (%)     
                  average                 
                  rate (%)                
 Overnight        1.9177      1.9143      +0.34  
                                          
                                          
 Seven-day        2.3437      2.2921      +5.16   
                                          
                                          
 14-day           3.1207      3.0343      +8.64  
                                          
                                          
 Overnight        4.1900      6.3600      -217.00
                                          
                                          
 Seven-day<CN7DR  4.0750      3.3200      +75.50     
 PO=SS>                                   
 14-day           3.3600      3.4500      -9.00    
                                          
                                          
 Overnight        1.9200      1.9000      +2.00      
 <CN1DRPFIX=CFXS                          
 >                                        
 Seven-day        2.3500      2.4000      -5.00      
 <CN7DRPFIX=CFXS                          
 >                                        
 14-day           2.9700      2.9300      +4.00      
 <CN14DRPFIX=CFX                          
 S>                                       
 Overnight        1.9340      1.9240      +1.00     
                                          
 Seven-day        2.3550      2.3480      +0.70     
                                          
 Three-month      3.0825      3.0774      +0.51     
                                          
 

    
 (Reporting by the Shanghai Newsroom and Nathaniel Taplin; Editing
by Nick Macfie)

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