PBOC conducts new survey of regional banks’ bond investments, sources say
2024.07.17 06:56
SHANGHAI (Reuters) – China’s central bank has made a fresh round of surveys on bond investments held by some regional banks, weeks after it hinted that it could use the billions of yuan worth of sovereign bonds at its disposal to support plunging yields, three sources familiar with the matter said.
Banking sources told Reuters on Wednesday that local branches of the People’s Bank of China (PBOC) had initiated another round of surveys into the bond portfolios of some regional lenders.
The surveys looked into the banks’ balance, leverage ratio, duration, and holding structure across different bond categories, said the sources, who declined to be named as they are not authorised to speak to media.
The PBOC did not immediately respond to a Reuters’ request for comments.
Demand for China’s sovereign bonds has surged this year, with yields hitting record lows, as investors seek safe haven investments amid a slowing economy and volatile stock markets. This has heightened concerns among policymakers that such moves could trigger financial instability.
The PBOC requested various data submissions earlier this week “presumably with a singular purpose in mind – to monitor risk,” said one source.
“It’s basically filling forms, similar to what we’ve done before, probably to grasp the most recent data,” said another source.
In March, the central bank said it was surveying rural financial institutions’ investments in bond markets.
The fresh round of checks comes after the PBOC said earlier this month that it had hundreds of billions of yuan worth of bonds at its disposal to sell, which it can use to put a floor under plummeting long-dated yields.
Yields on China’s 10-year and 30-year have fallen around 33 basis points (bps) and 36 bps so far this year.
