China’s Ministry of Finance failed to attract enough bids to sell all of the three-month bills it planned to sell in an auction Friday, as a liquidity squeeze hurt investor demand for new debt offerings.
The lackluster demand for the bill sale comes as China’s short-term money market rates have been rising recently after the central bank raised banks’ reserve requirement ratio three times since November and amid a seasonal year-end increase in demand for cash from companies and individuals.
The weighted average interbank seven-day repurchase rate, a benchmark gauge of short-term liquidity, rose to 6.25% Friday from 5.71% Thursday, compared with a rate of about 3.60% a week earlier.
The ministry said in a statement it sold 16.76 billion yuan ($2.53 billion) worth of three-month bills at 3.6769%, short of the 20 billion yuan worth it planned to sell.
Friday’s was the second uncovered government debt auction within a month to attract insufficient demand, after the ministry sold just 58% of the planned 20 billion yuan worth of three-month bills on Nov. 26.
The bills will trade on the interbank market and the country’s two stock exchanges from Dec. 31, the ministry said last week.
-Wang Ming contributed to this article
This entry passed through the Full-Text RSS service — if this is your content and you're reading it on someone else's site, please read our FAQ page at fivefilters.org/content-only/faq.php
Five Filters featured site: So, Why is Wikileaks a Good Thing Again?.