MNI China Press Digest Aug 25: Investment, Rates, Developers

The following lists highlights from Chinese press reports on Thursday:

• China will increase policy banks' quota of financial instruments by more than CNY300 billion and allow local governments to issue an additional CNY500 billion of investment project-backed special bonds by the end of October, with policymakers looking to promote investment and consumption in a bid to stabilize economic growth, according to a statement on the government's website following the State Council executive meeting chaired by Premier Li Keqiang on Wednesday. It also gave a green light for central power generation enterprises to issue CNY200 billion of bonds in order to guarantee energy supply, as well as allocating CNY10 billion to help rice farmers cope with drought, the statement said.
• Money market interest rates will gradually move higher, closing the gap with the 7-day reverse repo rate (which currently stands at 2.00%), after the PBOC conducted a partial roll over of the maturing Medium-term Lending Facility on Aug 15, draining liquidity, the Shanghai Securities News reported, citing analysts. The DR007 rate, which hovered around 1.30% in the first half of August, has climbed for a few days, briefly rising above 1.40%, while the DR001 rate has also edged higher, moving away from the 1.00% area that it operated in for around half a month. The PBOC may continue to drain medium- and long-term liquidity with less MLF rollovers in the coming months, in a bid to guide money market rates closer to the policy rate, the newspaper said, citing Ming Ming, chief economist of CITIC Securities.
• The bond financing channels for private property developers are gradually recovering, with more developers planning to issue bonds aided by credit enhancement support from China Bond Insurance, the Securities Times reported, citing industry insiders. Private developers’ difficulty when it comes to issuing bonds overseas has further aggravated repayment pressures, while promoting their bond financing with a full guarantee from credit enhancement firms will help improve cash flows and boost market confidence, the newspaper noted, citing an unnamed insider. On Tuesday, the first fully-guaranteed private developer bond was issued by Chongqing Longhu Enterprise Development, totaling CNY1.5 billion, with the company aiming to repurchase or repay overseas dollar bonds, the newspaper said.