PBOC Issues More Yuan-Based Central Bank Bills in HK
Tang Shihua
DATE:  Feb 13 2019
/ SOURCE:  yicai

(Yicai Global) Feb. 13 -- The People's Bank of China issued its second batches of yuan-denominated central bank bills in Hong Kong today.

PBOC successfully issued two types of CBBs of a different duration, each of CNY10 billion (USD1.5 billion) volume. The winning rate for the three-month maturity bill was 2.45 percent, with the one-year bill at 2.80 percent, the central bank announced in a statement today.

CBBs is an indirect tool a central Bank uses to give effect to monetary policy via open market operations to control the money supply in the economy, target an interest rate, attain or maintain price stability, and advance economic growth. CBBs resemble treasury bills, being short-term discounted paper with fixed maturities redeemable on maturity at par. Central banks set the issue and sales amounts and terms and maturities. Investors then determine interest rates or yields at auction. Only commercial banks and other financial institutions may invest in CBBs.

The winning bidding rate for the bills dropped greatly from the first batch issued in November. Back then, the rate for the three-month issue was 3.79 percent, while that of the one-year instruments was 4.20 percent.

The notes, which drew more than CNY120 billion in cash bidding, were oversubscribed, with more than six times as many pre-purchased as were available, according to PBOC.

The bills add more high credit rating yuan-denominated investment assets to the Hong Kong market and provide it with greater liquidity adjustment tools.

They also improve the yield curve of redback bonds in the local market, thereby advancing the currency's internationalization, per the statement.

Editor: Ben Armour

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Keywords:   Central Bank Bills Issuing,Hong Kong,RMB,PBOC