Interbank funding costs for low-rated...>

CHINA PRESS: Interbank funding costs for low-rated banks are likely to see a

sharp rise due to new regulations prohibiting issuance of the NCDs with maturity

of more than one year, the Shanghai Securities News reported Monday. The

People's Bank of China is also considering including NCD issuance in its

quarterly macro-prudential assessment of banks, which would increase the

interest rate spread for the NCDs issued by banks with different ratings, the

report said. As of September 3, the volume of the NCDs issued by banks rated

lower than AA+ accounted to 13.7% of total outstanding NCDs, the report noted.

Although the new regulations do not prohibit money market funds from investing

in NCDs, their willingness to invest in lower-rated issues will obviously

decline. Some small banks have already started to reduce their issuance, the

report added. (Shanghai Securities News)