PBoC raises RM12b in bill sale in Hong Kong

By BLOOMBERG

HONG KONG • The People’s Bank of China (PBoC) sold 20 billion yuan (RM12.07 billion) of bills in its first issuance in Hong Kong yesterday, a move that could reduce the offshore yuan’s liquidity and support the Chinese currency.

PBoC sold 10 billion yuan of three-month bills at 3.79%, according to a statement on the central bank’s website. It issued 10 billion yuan of one-year notes at 4.2%, versus a 2.77% yield on Chinese government bonds of the same tenure traded in the onshore market.

Both tenures are oversubscribed, with 42.6 billion yuan of orders being placed for the three-month notes and 32.9 billion yuan put in for the one-year bills, according to a statement from the Hong Kong Monetary Authority (HKMA).

PBoC bill issuance can improve the yield curve in the offshore market, providing benchmark for other yuan products, according to HKMA CEO Norman Chan.

“The rates on the PBoC bi l ls are higher than expected, as the offshore yuan’s implied yields were high when the orders were priced yesterday morning,” said Becky Liu, Hong Kongbased head of China macro strategy at Standard Chartered plc. “This won’t have significant impacts on the yuan in the longer term.”

The offshore yuan rose 0.18% to 6.9116 per dollar as of 6:04pm yesterday in Hong Kong, erasing an earlier loss of as much as 0.22%. The onshore rate is little changed at 6.9161 per dollar.