PBOC to Conduct USD765 Million Bill Swap to Prop Up Perpetual Bonds
Dou Shicong
DATE:  Dec 24 2020
/ SOURCE:  Yicai
PBOC to Conduct USD765 Million Bill Swap to Prop Up Perpetual Bonds PBOC to Conduct USD765 Million Bill Swap to Prop Up Perpetual Bonds

(Yicai Global) Dec. 24 -- The People's Bank of China will conduct a CNY5 billion (USD765 million) central bank bill swap today to boost the liquidity of the perpetual bond market.

The CBS has a three-month term and a nominal interest rate of 2.35 percent, according to the central bank. The fixed fee rate for primary open market dealers will be 0.1 percent.

The central bank kicked off CBS operations in February last year. In the operation, primary open market dealers can swap perpetual bonds issued by qualified banks with central bank bills at low rates. These bills can be used to participate in the PBOC's collateral currency operations, thereby boosting the liquidity of perpetual bonds in the hands of dealers.

The central bank has conducted CBS 12 times this year, including today's, for a total value of CNY61 billion.

Perpetual bonds have no maturity date. Though irredeemable, they yield a steady flow of interest in perpetuity. They are thus often deemed equity rather than debt.

Editor: Ben Armour

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Keywords:   PBOC,Bill Swap,Perpetual Bonds