The week in renminbi: PBoC moves to liberalise interest rate, interbank bond issuance jumps, Hong Kong protests rage

In this round-up, the People’s Bank of China announced a new benchmark rate for loans, a reported 1.7 million people held a rally in Hong Kong on Sunday and the issuance of Chinese onshore credit bonds climbed in July

  • By Rebecca Feng
  • 19 Aug 2019
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The People’s Bank of China (PBoC) has made important changes to a reference rate for banks’ lending to their top clients. The loan prime rate (LPR), unveiled on Saturday, is part of the central bank’s ongoing interest rate reform initiative. It will become the main reference rate for mortgages and commercial loans to all clients.

The moves finally addresses a problem that has faced banks for many years: the previous reference rate has not adjusted quickly enough. At the moment, onshore loans are benchmarked against the PBoC’s one-year lending rate. It has been 4.35% since October 2015.

The LPR will be calculated from the average of quotes from 18, including city commercial banks, rural commercial banks, foreign banks and private-owned banks to better reflect the funding costs. The highest and lowest quotes will be removed. The rate was previously calculated using quotes from only 10 national banks.

The methodology still gives the PBoC some control over the numbers. Banks will asked to benchmark their quotes against the the one-year medium-term loan facility (MLF) rate, which is set by the central bank. The last time the PBoC changed the MLF rate was in April 2018. 

The first LPR will be announced at 9:30am on Tuesday. After that, the rate will be announced on the 20th of each month. The central bank will also announce both one-year and a five-year LPRs.

This is part of the PBoC’s effort to unblock the transmission mechanism from the interbank funding cost to the real economy, a move long in preparation.


Interbank bond market issuance passed Rmb3.8tr ($539.4bn) in July, according to data released by the PBoC on Friday.

This data includes Rmb358.5bn of central government bonds, Rmb555.9bn of local government bonds took up, Rmb623.6bn  of financial bonds, Rmb763.5bn of so-called ‘credit bonds’ (bonds sold by corporations), Rmb124bn of asset-backed securities and Rmb1.4tr of negotiable certificates of deposit.

New issuance of credit bonds rose 29% from June, making it the fastest-growing part of the market. Local government bonds showed the biggest decline, dropping 38% from June.

Trading volumes in the interbank bond market reached Rmb19.1tr in July, with an average daily volume (ADV) of Rmb828.8bn. That was a 31.5% year-on-year increase.

In the exchange market, total trading volumes in July amounted to Rmb763.5bn with an ADV of Rmb33.2bn, a 36.79% year-on-year increase.


Inflows from offshore investors to onshore financial institutions reached Rmb31.6bn in the second quarter, according to data published by the State Administration of Foreign Exchange on Friday. Outflows were Rmb21.4bn, creating a net inflow of Rmb10.1bn

Meanwhile, onshore financial institutions saw a total outflow of Rmb33.9bn and inflow of Rmb26.4bn, creating a net outflow of Rmb7.5bn.


Hong Kong residents staged a protest on Sunday aftenroon. According to the organisers, a total of 128,000 protesters filled the Victoria Park in Causeway Bay at the peak of the protest. Organisers added that 1.7 million people joined the rally, local media reported. 

  • By Rebecca Feng
  • 19 Aug 2019

GlobalRMB Panda Bonds league table

Rank Arranger Share % by Volume
1 Bank of China (BOC) 23.56
2 Industrial and Commercial Bank of China (ICBC) 16.09
3 China Merchants Securities Co 11.38
4 Agricultural Bank of China (ABC) 6.90
5 HSBC 5.75

Panda Bond Database

Pricing Date Issuer Country Size Rmb (m)
1 03-Sep-19 China Power International Development China 2,000
2 02-Sep-19 China Power International Development China 500
3 22-Aug-19 Mengniu Dairy China 1,000
4 07-Aug-19 Daimler Germany 5,000
5 31-Jul-19 Cassa Depositi e Prestiti SpA Italy 1,000

Offshore RMB Bond Top Bookrunners

Rank Bookrunner Share % by Volume
1 Standard Chartered Bank 32.50
2 Credit Agricole 6.34
2 HSBC 6.34
4 Bank of China (Hong Kong) (BOCHK) 6.22
4 Bank of Communications Hong Kong Branch (BOCOM HK) 6.22

Latest Offshore RMB Bonds

Pricing Date Issuer Country Size Rmb (m)
1 16-Jul-19 CIFI Holdings China 1,600
2 22-May-19 Agricultural Development Bank of China (ADBC) China 3,000
3 16-Apr-19 ICBC Singapore Branch China 1,000
4 10-Apr-19 Bank of China Macau Branch (BOC Macau) China 4,500
5 15-Mar-19 Bank of Communications Hong Kong Branch (BOCOM HK) China 2,500