Local Government Bond Sales Could Increase

The PBOC injected CNY 10bn of liquidity into the system via OMOs today, equating to a net drain of CNY 20bn. Repo rates have risen slightly but are within recent ranges, overnight rate up 13bps at 1.8305%, 7-day repo rate is up 3.9bps at 1.989%. Futures are lower, 10-year down 8 ticks at 100.440, but sticking to recent ranges.

• There were reports that local government bond sales will increase in August and September due to slower issuance in the first seven months of the year which was only around 50% of the expected. Shanghai Securities News reports that China could sell CNY 1tn of local government bonds this month. Elsewhere the 21st Century Business Herald reports that local governments have bene asked to file special bond plans for 2022.
• Elsewhere S&P cut Evergrande's debt ratings CCC, to one of the lowest levels of junk amid concerns the developers access to funding could be squeezed. Meanwhile four months after Huarong failed to announce its 2020 results, the bad-debt manager may finally be close to releasing earnings.