The central bank completes the liquidity injection operation with an additional $ 20 billion net, a move to guarantee cash without disengagement from large companies on the debt restructuring front. The big Chinese groups “too big to fail” are grappling with impending deadlines and fighting to avoid default. Huarong and Hna are at risk, while Evergrande, like Suning, has announced a medium-term solution. A difficult bet for China: to keep defaults at bay without discouraging investments in a market worth 12 trillion dollars.
Targeted support from the Central Bank
The central bank completed the liquidity injection operation with a dose of $ 4.6 billion in seven-day repos (reverse repurchase agreements), with a net result of $ 20 billion.
Loading…
Ensuring the liquidity and stability of the system without discouraging investments in the corporate bond market is Beijing’s main objective, especially as there are local bond sales of 660 billion yuan arriving by the end of the month, a move that could jeopardize the liquidity of the interbank system.
Better to prevent, therefore. By the end of the year, 4.15 trillion yuan of corporate debt accrues, a measure three times that of 1.3 trillion in the first half of the year. Many companies look to this deadline before making their moves in the short term.
New financial rules for the industry
In August, Beijing introduced new financial rules for the industry sector which accounts for 29% of the output. In the meantime, in checking liquidity, then in reducing cash levels by effectively reducing the availability for the purchase of bonds. A strategic campaign that is reshaping a 12 trillion dollar market.