52 basis points for first-year floating interest rate

Xinhua Beijing January 20: This year's first floating interest rate spreads 52 basis points by the market eagerly subscribed reporter Huayadi, Yang Yinen 20th morning tender Issue the first time this year floating interest debt state to open the 7 year fixed deposit to carry out the bid spreads is 52 basis point, the corresponding interest rates is 2.77%, below the market expectation,　　The first bid for more than 2.6 times times the number of subscriptions, due to the enthusiastic market subscription, the country opened the bank subsequently issued an additional 20 billion yuan, the total issue reached 40 billion yuan.　　Analysts pointed out that the tender results show that there is ample market capital, the pressure of institutional allocation, but in view of the current floating-rate debt in real investment value is not as solid debt, in the coming period of time, the interest rate spreads or further increase. The tender results of the 52 basis points for the first floating interest rate of the year were indicated, the 7-year fixed deposit of the National Bank to carry out the profit margin is 52 basis points, the corresponding interest rate is 2.77%, lower than the market earlier expected, the first tender, 16.83 billion yuan tender amount to obtain 43.36 billion yuan effective subscription, subscription multiples reached 2.58 times times.　　In view of the very enthusiastic market subscription, the country opened the bank subsequently issued 20 billion yuan, the total amount of the issue reached 40 billion yuan. "Mainly due to ample short-term funding." Said Chen Liang, a researcher at the research Center for fixed income of China Sea securities.　　Data show that the current 1-day, 7-day repurchase rates are still low, respectively, in the vicinity of 1.05% and 1.4%, other maturities are kept at a low level, reflecting the short-term market funds will still be abundant, the market structure of pressure.　　The subscription data showed that 13 financial institutions had subscribed for over $1 billion on the same day, of which four companies, including Bank of China and Ping An bank, had subscribed to over $3 billion.　　Chen Jianheng, a fixed income researcher at CICC, points out that, as regulators tighten credit increment controls, banks that are the dominant force in the bond market may face a "broad currency and tight credit" situation, with pressure to increase. CICC estimated that in 2010 the bank can invest in bonds of about 2.9 trillion yuan, if the insurance companies, funds and other institutional needs, the bond market demand may reach 3.6 trillion yuan, and supply between 2.85 trillion to 3.35 trillion yuan.　　"Demand is greater than supply" will undoubtedly inhibit the bond market interest rate upward.　　The real investment value is inferior to the fixed interest debt although "sell well", it cannot be neglected that the real investment value of the current floating interest debt is not the same as the term fixed interest debt.　　For example, in the case of a State bank debt issued on that day, the spread is 52 basis points, taking into account the one-year fixed deposit rate of 2.25%, corresponding to the 7-year floating interest rate of 2.77%, compared with the same period of fixed financial debt 3.97% yield level of 120 basis points, implying about 4 interest rate expectations.　　Chen said that in spite of the recent increase in interest rate increases are expected to strengthen, but in the short term still does not have the conditions of 4 interest rate hikes, due to overdraft interest rate more frequent, floating interest rate spreads may be further raised, the current holding of floating interest rates have a certain risk. "From the perspective of holding maturity, the interest returns on floating-interest debt are likely to be less than the fixed-interest debt.　　Chen Jianheng said, but for issuers, can achieve the goal of saving the cost of financing. In fact, how to meet the basic financing demand and try to reduce the financing cost is the current problem that the policy bank needs to face.　　One way to do this is to increase the share of floating-interest debt, as expectations of higher interest rates increase, and policy banks are likely to continue to have more floating-interest debt. It is noteworthy that the current state of the bank's floating interest rate of two times a year, if the central bank in the first half of the interest rate, then the holding of the bond in the second coupon period will be able to enjoy the benefits of higher coupon, "This may also be one of the reasons for lower than expected.　　"said Chen Liang.　　Interest rate spreads or further increase in a number of market participants said in an interview, although the increase in expectations of higher interest rates to keep the allocation of floating debt demand remains strong, but with the increase in supply, the future deposit of floating interest spreads or will gradually expand. Chen Liang Analysis said, the fixed deposit floating interest spreads will expand, should consider the future interest rate to follow what path.　　According to the calculation of the National Sea Fixed Income Research center, combined with the current interest rate level and the yield curve analysis, the current 7-year floating financial bond spreads are more reasonable at 65 basis points.　　It is worth mentioning that, as a number of research institutions in recent years to improve the December CPI Year-on-year growth forecast, coupled with the beginning of the first Central bank regulation policy has been announced earlier than the market expectations, the market for the timing of the rate hike is also gradually ahead.　　Chen Jianheng said that, driven by increased interest rate expectations, there is still a strong demand for the retention of floating interest debt, "although the interest rate of the float is less than the fixed-interest debt, but for the bank, the fixed floating interest debt has the advantage of small valuation risk, meet the requirements of the bank's balance of assets and liabilities, the demand is still large." However, some market participants cautioned that in the coming period, policy banks may continue to set up more and more floating interest rates from the consideration of reducing the cost of financing, and the increase in supply may gradually push up the spreads on floating-interest debt issuance.