PBOC Issues 30B Yuan in Central Bank Bills via Hong Kong

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The People’s Bank of China (PBOC) successfully issued 30 billion yuan in central bank bills in Hong Kong on 14 August.

The issuance consisted of 20 billion yuan in 3-month central bank bills, for which the bid rate was 2.90%, and 10 billion yuan in 1-year central bank bills, with a bid rate of 2.95%.

The issue was oversubscribed 2.6 times, with on-site bidding in excess of 78 billion yuan.

According to PBOC subscribers included offshore market investors such as commercial banks, funds, central banks and international financial organisations.

The Chinese central bank previously said that the move was intended to improve the yield curve of Hong Kong’s yuan-denominated bonds.

PBOC has traditionally used central bank bill sales in Hong Kong as a means of propping up the offshore exchange rate by absorbing liquidity.

Since November 2018 PBOC has issued 120 billion yuan in central bank bills via Hong Kong, with key tenors including 3-months, 6-months and 1-year.

PBOC said that it had established the issuance of central bank bills via Hong Kong as a “normalised mechanism,” which is of benefit to “diversifying high-credit rating renminbi investment products and renminbi liquidity management tools on the Hong Kong market; improving the Hong Kong bond yield curve, and driving internationalization of the renminbi.”

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