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Issuance To Pick Up To Fund Growth

CHINA RATES
  • The issuance of government bonds is expected to significantly speed up in the third quarter, helping to accelerate infrastructure investment and stabilize economic growth.
  • Publicly released statements show local governments are scheduled to issue a combined 1.6534 trillion yuan of special bonds in the third quarter, up 505.6 billion yuan from the same period last year; China issued 250 billion yuan of ultra-long treasury bonds in the first six months of this year and will sell the remaining 750 billion yuan of such bonds by mid-November.
  • The PBOC’s decision on Monday allows banks to apply for a reduction or exemption from collateral requirements for receiving its one-year policy loans. The manoeuvre aims to encourage banks to offload their bond holdings to the market, helping put a floor under the long-term bond yields. Following the announcement the yield curve steepened, with the longer-term yields falling less than shorter-term rates.
  • These measures are an obvious attempt to halt the decline in yields an allay concerns about a ‘bond bubble’ through issuance.
  • Steepening the curve through longer dated issuance is likely to be a key issuance objective, whilst anchoring the short end via the reverse repo.
  • Bonds hardly reacted throughout the morning today with three new bond auctions: CNY82bn 2031, CNY93bn 2025, CNY55bn 2054
  • 2yr 1.52% 5yr 1.88% 10yr 2.22% 30yr 2.445%
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  • The issuance of government bonds is expected to significantly speed up in the third quarter, helping to accelerate infrastructure investment and stabilize economic growth.
  • Publicly released statements show local governments are scheduled to issue a combined 1.6534 trillion yuan of special bonds in the third quarter, up 505.6 billion yuan from the same period last year; China issued 250 billion yuan of ultra-long treasury bonds in the first six months of this year and will sell the remaining 750 billion yuan of such bonds by mid-November.
  • The PBOC’s decision on Monday allows banks to apply for a reduction or exemption from collateral requirements for receiving its one-year policy loans. The manoeuvre aims to encourage banks to offload their bond holdings to the market, helping put a floor under the long-term bond yields. Following the announcement the yield curve steepened, with the longer-term yields falling less than shorter-term rates.
  • These measures are an obvious attempt to halt the decline in yields an allay concerns about a ‘bond bubble’ through issuance.
  • Steepening the curve through longer dated issuance is likely to be a key issuance objective, whilst anchoring the short end via the reverse repo.
  • Bonds hardly reacted throughout the morning today with three new bond auctions: CNY82bn 2031, CNY93bn 2025, CNY55bn 2054
  • 2yr 1.52% 5yr 1.88% 10yr 2.22% 30yr 2.445%