Bloomberg News

China Money Rate Rises as Shipbuilding Bond Sale Drains Capital

June 06, 2012

China’s money-market rate climbed to a two-week high on speculation cash supply will decline after a debt sale by China Shipbuilding Industry Co. drained funds.

The state-backed supplier of submarines, missile destroyers and merchant vessels sold 8.1 billion yuan ($1.3 billion) of six-year convertible bonds on June 4. The sale locked up capital amounting to some 214 billion yuan from individual and institutional investors, according to the company’s statement yesterday. The cash will be returned to bidders tomorrow, according to a statement on May 31.

“Cash supply will remain week before the money used to subscribe for China Shipbuilding bonds is returned,” said Wang Huane, a senior bond trader at Qilu Bank Co. in Jinan, capital of the eastern Shandong province. “Only some big banks are willing to lend out money in market today.”

The seven-day repurchase rate, which measures interbank funding availability, gained nine basis points to 2.68 percent as of 10:42 a.m. in Shanghai, according to a weighted average rate compiled by the National Interbank Funding Center. That is the highest level since May 22.

The central bank sold 20 billion yuan of 91-day repurchase contracts today, according to a statement on its website.

The one-year swap contract, the fixed cost needed to receive the floating seven-day repurchase rate, climbed two basis points, or 0.02 percentage point, to 2.57 percent, according to data compiled by Bloomberg.

The yield on the 3.51 percent government bond due February 2022 rose one basis point to 3.38 percent, according to the Interbank Funding Center.

To contact Bloomberg News staff for this story: Judy Chen in Shanghai at xchen45@bloomberg.net

To contact the editor responsible for this story: Sandy Hendry at shendry@bloomberg.net


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