MNI China Press Digest, Sept 24: LGBs, LPR, Liquidity

     BEIJING (MNI) - The following lists highlights from Chinese press reports

on Tuesday:

     Chinese local government authorities could potentially use next year's

quota of bond issuance this year as a result of downward economic pressure,

China Securities Journal said in a commentary. It was still unclear if the

front-loading of issuance would begin this year or early next year, the

newspaper said, and there were no details on the scale of the issuance. The

issuance of special bonds may have a limited impact on boosting infrastructure

construction in the short term, Securities Journal said.

     It is imperative to use the new Loan Prime Rate (LPR) for lending, even

though it will squeeze banks' profits, China Securities Journal reported.

Current bank margins are not low and can be further reduced, the newspaper said

citing unnamed analysts. The new LPR has been linked with loans, bonds and

interest rate swaps, the newspaper added.

     The PBOC has restarted the injection of 14-day reverse repos after a lapse

of three months, the PBOC-run newspaper Financial News reported. The report says

the move aims to offset the demands of tax payments, government bond issuance

and the maturity of cash management by local treasuries with the goal of keeping

liquidity levels stable at the end of the quarter. The continuous injection of

14-day reverse repos since last Thursday had eased the tight liquidity

conditions, the newspaper said.

--MNI Beijing Bureau; +86 (10) 8532-5998; email: wanxia.lin@marketnews.com

--MNI Sydney Bureau; +61 405322399; email: lachlan.colquhoun.ext@marketnews.com

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