Chinese Bond Auction Falls Short

[verydumbubba]

Perhaps theres has simply been too much Dollar badmouthing by the Chinese, and it

has come back to haunt them!

Bubba

Courtesy BBC

China's finance ministry has failed to sell all 28bn yuan ($4.1bn; £2.55bn) of one-year government bonds it offered at an auction.

It is the first under-subscribed government bond auction since 2003.

The ministry sold a total of 27.52 billion yuan of the bonds, which offered a yield to investors of 1.06%.

It comes as the government looks to tighten its monetary policy to prevent the risk of asset bubbles, loan defaults and rapid inflation.

Meanwhile, the Chinese city of Hangzhou has started tightening mortgage lending terms, ahead of any changes to monetary and credit policies by the national government.

The signs that China may ditch its loose monetary policy dragged down bank stocks in Hong Kong and Shanghai on Wednesday.

Chinese property prices nationwide have increased since March, after seven months of falls.

http://news.bbc.co.uk/2/hi/business/8139902.stm

[LaoPo]

Perhaps theres has simply been too much Dollar badmouthing by the Chinese, and it

has come back to haunt them!

Bubba

http://news.bbc.co.uk/2/hi/business/8139902.stm

They sold Billion 27,52 Yuan out of Billion 28 Yuan and that's indeed short with a staggering 1,71% of the total.

Why that is now haunting them is a mystery to me but maybe you know something that I don't ?

What that has to do with the US$ is also beyond me but it seems that the Chinese handle the rising house prices a little better than Western countries.

If the USA and some European countries would have followed the Chinese rules by enforcing stiff down payments when buying a house, the Western world wouldn't have been in the severe trouble we are in now.

"Hangzhou has doubled the minimum deposit for purchases of second homes to 40%, and also increased the rate on mortgages for second homes to 10% more than the benchmark set by the central bank."

That means that "old" deposits were already 20% of the buying price.

Apart from the above 28bn Yuan is a small amount in China.

In comparison:

".........10 Chinese banks signed a syndicated loan contract for 18 projects totaling 176.2 billion yuan, China's largest syndicated loan in the history of its banking industry. "

and:

"By the end of 2008, China's syndicated loans reached 956.6 billion yuan, growing 53% year on year. "

Source: Chinastakes.com

LaoPo

[Chunkton]

Perhaps theres has simply been too much Dollar badmouthing by the Chinese, and it

has come back to haunt them!

Bubba

Courtesy BBC

China's finance ministry has failed to sell all 28bn yuan ($4.1bn; £2.55bn) of one-year government bonds it offered at an auction.

It is the first under-subscribed government bond auction since 2003.

The ministry sold a total of 27.52 billion yuan of the bonds, which offered a yield to investors of 1.06%.

It comes as the government looks to tighten its monetary policy to prevent the risk of asset bubbles, loan defaults and rapid inflation.

Meanwhile, the Chinese city of Hangzhou has started tightening mortgage lending terms, ahead of any changes to monetary and credit policies by the national government.

The signs that China may ditch its loose monetary policy dragged down bank stocks in Hong Kong and Shanghai on Wednesday.

Chinese property prices nationwide have increased since March, after seven months of falls.

http://news.bbc.co.uk/2/hi/business/8139902.stm

Yes, hardly a failure. I think you may find it isn't only the Chinese bad mouthing the dollar. And perhaps it may have something to do with the US government running enormous debts, printing money with a passion which raises fears for holders of US Dollar denominated assets.

Jim Rogers recently said he was selling off all his US dollars and shorting treasuries. There are many respected investors with the same idea. They are only reacting to reality.

[Theyreallrubbish]

Perhaps theres has simply been too much Dollar badmouthing by the Chinese, and it

has come back to haunt them!

Bubba

http://news.bbc.co.uk/2/hi/business/8139902.stm

They sold Billion 27,52 Yuan out of Billion 28 Yuan and that's indeed short with a staggering 1,71% of the total.

Why that is now haunting them is a mystery to me but maybe you know something that I don't ?

What that has to do with the US$ is also beyond me but it seems that the Chinese handle the rising house prices a little better than Western countries.

If the USA and some European countries would have followed the Chinese rules by enforcing stiff down payments when buying a house, the Western world wouldn't have been in the severe trouble we are in now.

"Hangzhou has doubled the minimum deposit for purchases of second homes to 40%, and also increased the rate on mortgages for second homes to 10% more than the benchmark set by the central bank."

That means that "old" deposits were already 20% of the buying price.

Apart from the above 28bn Yuan is a small amount in China.

In comparison:

".........10 Chinese banks signed a syndicated loan contract for 18 projects totaling 176.2 billion yuan, China's largest syndicated loan in the history of its banking industry. "

and:

"By the end of 2008, China's syndicated loans reached 956.6 billion yuan, growing 53% year on year. "

Source: Chinastakes.com

LaoPo

I don't know the exact figures for Chinese government bond auctions, but in US auctions anything below a 3 times cover is considered worrying by the markets.

The market had a bit of a fit yesterday when a 1 year auction came in at only 2.7 times cover.

Hope this adds a little perspective and shows what a big deal an outright failure is

[jbaldwin]

If anyone had suggested 10 years ago that one day China might be able to sell any one year bonds at an interest rate of 1.06%, I do not think anyone would have beleive them. To me this story reflects absolutely amazing progress rather than failure

[Junglejumbo]

who would want 1.06% especially when inflation is what? Around 5-6% still?

[flying]

I guess I am becoming a conspiracy type after all

First thought that came to my mind after seeing this on the news was....

I guess China does not have their own FED RESERVE to buy up all their own bonds through their agents eh?

[Carib]

Just for fun..

[LaoPo]

Just for fun..

There's more truth in your "fun" than many realize....

Earlier this week China launched, for the first time, the possibility for a limited group of larger exporters to export (limited area in Far East) and pay in Yuan, rather then US $'s which is now normal for exports.

That will increase rapidly.

LaoPo

[Naam]

Perhaps theres has simply been too much Dollar badmouthing by the Chinese, and it

has come back to haunt them!

Bubba

http://news.bbc.co.uk/2/hi/business/8139902.stm

They sold Billion 27,52 Yuan out of Billion 28 Yuan and that's indeed short with a staggering 1,71% of the total.

Why that is now haunting them is a mystery to me but maybe you know something that I don't ?

What that has to do with the US$ is also beyond me but it seems that the Chinese handle the rising house prices a little better than Western countries.

do you really expect an answer from "Bubba"?

[flying]

I guess I am becoming a conspiracy type after all

First thought that came to my mind after seeing this on the news was....

I guess China does not have their own FED RESERVE to buy up all their own bonds through their agents eh?

Hmmm maybe not a conspiracy type...Maybe I'm a realist?

‘Artificially Suppressed’

The Fed bought $2.999 billion of Treasuries today maturing between July 2010 and April 2011, part of its $300 billion, six- month program to reduce lending rates. The central bank has bought $200.722 billion in U.S. debt through the operations, which began March 25. Today’s purchase will be followed by four more over the next two weeks.

http://www.bloomberg.com/apps/news?pid=206...id=awFFLx_TqnUY

[LaoPo]

Perhaps theres has simply been too much Dollar badmouthing by the Chinese, and it

has come back to haunt them!

Bubba

http://news.bbc.co.uk/2/hi/business/8139902.stm

They sold Billion 27,52 Yuan out of Billion 28 Yuan and that's indeed short with a staggering 1,71% of the total.

Why that is now haunting them is a mystery to me but maybe you know something that I don't ?

What that has to do with the US$ is also beyond me but it seems that the Chinese handle the rising house prices a little better than Western countries.

do you really expect an answer from "Bubba"?

Who's "Bubba" ? ..or do you mean verydumb-ubba?

LaoPo

[cloudhopper]

An update on the most recent auction-

http://www.bloomberg.com/apps/news?pid=206...id=agF6ftPkEj3Y