PBOC said to allow at least some lending facility to mature
[BEIJING] China's central bank decided against rolling over some medium-term loans, according to people familiar with the matter, as monetary easing in recent months lowered lenders' borrowing costs.
The People's Bank of China didn't extended at least some of the funds issued via its Medium-term Lending Facility, according to the people, who asked not to be identified because the move hasn't been made public. There is 670 billion yuan in three-month MLF loans maturing this month, according to Bloomberg calculations from central bank data.
Monetary easing this year has meant it's now cheaper for banks to obtain funds from one another than from the central bank. The three-month Shanghai Interbank Offered Rate has tumbled 190 basis points since March to 3 per cent, poised for the biggest quarterly decline since 2008. The PBOC's medium-term loans had a rate of 3.5 per cent.
Some of the medium-term loans are set to mature today and some tomorrow, a person familiar with the matter said.
The lack of a rollover tightens liquidity that's already strained as 25 initial public offerings lock up funds and at least five regional governments sell bonds this week. The central bank may add funds to the financial system by cutting lenders' reserve requirements or in open-market operations if the MLF aren't renewed, Guosen Securities analyst Dong Dezhi wrote in a note before the news.
The PBOC didn't reply to a fax seeking comment. Market News International reported earlier that some of the MLF funds won't be rolled over.
BLOOMBERG
BT is now on Telegram!
For daily updates on weekdays and specially selected content for the weekend. Subscribe to t.me/BizTimes
International
South Korea to slap fines on food suppliers for ‘shrinkflation’
Stormy Daniels’ ex-lawyer in the hot seat at Trump trial
New Zealand says ‘seriously concerned’ by China’s increased security actions in Pacific
EU, ISSB agree on minimising overlaps in company climate disclosures
US law firm Mayer Brown to split from Hong Kong partnership
US labour costs rise by most in a year as productivity cools