Over-subscription exceeds 6 times to adjust liquidity. Central bank bills re-enter Hong Kong

Following the first time in 2018 that the People’s Bank of China issued 20 billion yuan (RMB, the same below) “Central Bank Bills” in Hong Kong, the PBOC re-entered the sea yesterday. According to the PBOC website yesterday, on February 13, the PBOC successfully issued two central bank bills in Hong Kong, including 3 months and 1 year central bank bills of 10 billion yuan respectively. The winning rates were 2.45% and 2.80% respectively. The analysis believes that the PBOC can adjust the offshore renminbi liquidity by issuing central bank bills, stabilize market expectations, and help to consolidate Hong Kong’s position as an important financial center.

In the issuance of the central bank bill, the first term is 3 months (91 days), which is a fixed-rate interest-bearing bond with a maturing and repaying principal and interest, with a circulation of 10 billion yuan. The value date is February 15 this year. On the day, the due date is May 17. The second term is one year. It is a fixed-rate interest-bearing bond with a semi-annual interest payment of 10 billion yuan. The value date is February 15 this year and the maturity date is February 15 next year.

Compared with the central bank bill issued by the People’s Bank of China three months ago, the winning bid rate dropped significantly. The three-month central bank bill in November last year was 3.79%, and the one-year winning bid rate was 4.20%.

Two-year central bank bills issued after 5 years

The PBOC pointed out that the issuance attracted many investors from the offshore market to subscribe, and the total number of bids exceeded RMB 120 billion. The two-phase central bank subscription multiples were more than six times.

As early as November 7, 2018, the PBOC officially issued 20 billion yuan of central bank bills in Hong Kong through the Hong Kong Monetary Authority. It is worth mentioning that the time for the PBOC to issue the central bank bill last time is June 20, 2013, which means that the five-year central bank bill has been suspended and restarted again.

Ma Jun, member of the Monetary Policy Committee of the People’s Bank of China and director of the Center for Finance and Development Studies at Tsinghua University, said that the PBOC used the CMU bond tendering platform of the HKMA’s debt instruments to issue and issue PBOC bills in Hong Kong, which will help promote the international use of the RMB. . He also said that the PBOC bill is one of the liquidity management tools. In the future, the PBOC can also adjust the offshore RMB liquidity by issuing central bank bills, stabilize market expectations, and maintain the basic stability of the RMB exchange rate at a reasonable and balanced level.

The PBOC stressed that the successful issuance of RMB renminbi notes in Hong Kong indicates that this move is in line with market demand, enriching the high-credit renminbi investment product series and RMB liquidity management tools in the Hong Kong market, and also improving the yield curve of Hong Kong renminbi bonds. Help promote the internationalization of the RMB.

Lian Ping, chief economist of Bank of Communications, believes that the issuance of central bank bills in Hong Kong is an innovative attempt for offshore renminbi liquidity management. “In the past, offshore treasury liquidity management was mainly through the Hong Kong Monetary Authority, and now the PBOC can directly participate. The adjustment of the renminbi liquidity will better play a guiding role in the interest rate of the offshore renminbi market.”

Stabilizing the exchange rate to strengthen the status of Hong Kong’s hub

Zhao Xijun, deputy dean of the School of Finance and Finance of Renmin University of China, told this newspaper that it would be more convenient to issue central bank bills in the Mainland, but the PBOC once again chose to issue central bank bills in Hong Kong, which more reflects a positive attitude to support Hong Kong. The development of the offshore RMB market. In addition, the PBOC also considers from an international perspective and tends to absorb more international participants to further promote the internationalization of the RMB.

Wan Hao, chief economist of China National Gold Group, believes that in the short term, the issuance of central bank bills has increased the amount of RMB investment and also provided liquidity adjustment tools for the offshore RMB market. In the long run, the internationalization of Hong Kong, including Hong Kong, is needed in the process of promoting the internationalization of the RMB. The issuance of central bank bills in Hong Kong helps to consolidate Hong Kong’s status as an important financial center.