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SOFR Decline, Potential Drivers

GILT PAOF RESULTS

GBP562.500mln of the 0.25% Jul-31 gilt sold

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Repo Reference Rates -- SOFR Dips to 0.03%

     BEIJING (MNI) - The following are highlights from the China press for
Wednesday, Dec. 20:
     The National Development and Reform Commission has launched a nationwide
carbon trading system to guide companies on upgrading to meet China's goal of
achieving a greener and higher-quality economy, the commission announced Tuesday
on its website and blog. The NDRC emphasized the importance of using the trading
system to control carbon dioxide emissions and said the program would begin with
the power generation sector. The 21st Century Business Herald reported that
China's system could eventually grow larger than any other carbon trading market
in the world.
     China needs to expand the scope of taxation for local governments in order
to establish a stable and sustainable process, Finance Minister Xiao Jie wrote
in an article Wednesday in the official People's Daily. In his analysis of how
China should reform its fiscal system under the guidance of the 19th Communist
Party Congress, Xiao said that the country would continue to make changes to its
taxation process for property, personal income and local governments, and that
steady progress had been made on creating related laws. He stressed that the
rights and responsibilities of the central government and local governments in
their fiscal relationship should be clear and balanced. (People's Daily)
     Several Chinese banks have raised their interest rates to attract more
deposits at the end of the year, including two that have lifted rates to more
than 5%, the 21st Century Business Herald reported Wednesday. One reason is that
money market interest rates have gone up. Also, banks are competing more with
one another, and they need to store more cash for the customary surge in lending
at the beginning of the new year. Another factor is that banks are losing
deposits to upstart financial technology companies: the growth rate for deposits
at banks has dropped to an annualized 2% this year, on average, from 7.8% in
2016. Bank executives at a forum in Suzhou said they now pay more attention to
deposits because of the government's deleveraging campaign. (21st Century
Business Herald)
     A total of 15 bonds, worth nearly CNY15 billion, issued by Chinese
companies have defaulted since the start of November, the 21st Century Business
Herald reported Wednesday. The increasing frequency of bond defaults has led to
widespread delays or cancellations of issuance, affecting 760 bonds worth more
than CNY700 billion. One of the most recent cases was that of China City
Construction Corporation Limited, which announced Monday that its tight
financial situation had led it to default on CNY1 billion in bonds. China's
supply-side structural overhauls and its environmental protection campaign,
which can weigh on industrial production, have eaten into companies' profit and
made it difficult for them to manage their bond payments, analysts said. Another
reason given by the analysts is that bond market adjustments and new refinancing
rules in the stock market have made it hard for companies to roll over their
debt. (21st Century Business Herald)
--MNI Beijing Bureau; +86 (10) 8532-5998; email: iris.ouyang@marketnews.com
--MNI Beijing Bureau; +86 (10) 8532-5998; email: rich.dirks@marketnews.com
[TOPICS: M$A$$$,M$Q$$$,MBQ$$$]