SHANGHAI (Reuters) – China’s main bank’s choice to lower the security requirement for medium-term loans will relieve the “asset scarcity” pressure on the bond market, state media reported on Tuesday, pointingout a source.
The People’s Bank of China (PBOC) stated on Monday it would lower the security requirement for the medium-term financing center (MLF) loan to boost the size of tradable bonds in the market.
The relocation comes inthemiddleof a record-long rally in China’s sovereign bond markets that has triggered duplicated main bank cautions and steps to put a flooring under falling yields and avoid a market bubble.
The balance of impressive MLF loans now wentbeyond 7 trillion yuan ($962.44 billion), and the bulk of the security vowed for the loans are federalgovernment bonds and regional federalgovernment financialobligation.
“A big quantity of bonds will be launched if monetary organizations select to sell long-lasting bonds after the chan