Interbank CD’s Drop 36% in April

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China’s interbank market posted a sharp drop in the issuance of certificates of deposits in April, boding poorly for near-term liquidity levels.

The latest figures from Chinese financial data provider Wind indicate that in April the value of interbank CD issuance fell by 36% compared to the preceding month to 129.29 billion yuan.

Interbank CD figures have continued to decline in May, with the issuance volume in the first week of the month hitting a record low in terms of value since the start of the month.

While interbank CD’s accounted for over half of the entire debt issuance market in March, this figure fell to 43% last month.

According to analysts regulatory pressure is behind the abrupt decline in interbank CD issuance, with banks more preoccupied with ensuring their operations satisfy tightened compliance requirements.

Chinese banks have also become more cautious about liquidity levels in the second quarter of 2017, with a huge volume of interbank CD’s set to mature in May and June.

This pressure on liquidity has led to a rise in interbank CD prices and further tightening of issuance levels.

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