PBOC Conducts 5 Billion Yuan in Central Bank Bill Swap Operations on 30 July

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The People’s Bank of China (PBOC) undertook 5 billion yuan in central bank bill swaps (CBS) on 30 July, with a tenor of three months and a rate of 0.10%.

The CBS operation was an open market operation with bidding amongst primary dealers, with winning bidders including big state-owned banks, joint stock banks, municipal commercial banks, rural commercial banks and securities firms.

PBOC said that the purpose of the operation was to “raise the liquidity of the market for bank perpetual bonds, support the issuance of perpetual bonds by banks to supplement capital, and strengthen the ability of finance to service the real economy.”

PBOC first ap­proved the is­suance of per­pet­ual bonds by Chi­nese banks at the start of 2019, in or­der give lenders an ad­di­tional chan­nel for cap­i­tal sup­ple­men­ta­tion pur­poses. 

PBOC si­mul­ta­ne­ously an­nounced the launch of cen­tral bank bill swaps (CBS), with the goal of bol­ster­ing the liq­uid­ity of per­pet­ual bonds, as well as the ac­cep­tance of bank per­pet­ual bonds with rat­ings of no lower than “AA” as qual­i­fied col­lat­eral for medium term lend­ing fa­cil­i­ties (MLF), tar­geted medium term lend­ing fa­cil­i­ties (TMLF) and stan­dard lend­ing fa­cil­i­ties (SLF).

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