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PBOC May Sell Treasuries To Curb Falling Bond Yields

CHINA PRESS
MNI (Singapore)

The People’s Bank of China may start selling treasury bonds after deciding to borrow from selected primary dealers, in a bid to increase bond supply and curb falling yields of medium- and long-term bonds, Shanghai Securities News reported citing analysts. The central bank has repeatedly warned of maturity mismatch and interest rate risk from holding large amounts of longer-term bonds, the newspaper said. The PBOC’s holdings of government bonds are mostly three years or less, and treasury borrowing operations may pave the way for bond sales, said Zhou Guannan, chief fixed income analyst of Huachuang Securities.

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The People’s Bank of China may start selling treasury bonds after deciding to borrow from selected primary dealers, in a bid to increase bond supply and curb falling yields of medium- and long-term bonds, Shanghai Securities News reported citing analysts. The central bank has repeatedly warned of maturity mismatch and interest rate risk from holding large amounts of longer-term bonds, the newspaper said. The PBOC’s holdings of government bonds are mostly three years or less, and treasury borrowing operations may pave the way for bond sales, said Zhou Guannan, chief fixed income analyst of Huachuang Securities.