China seen selling 3-yr govt bonds around 2.19 pct
SHANGHAI, July 14 (Reuters) - China's Ministry of Finance is expected to auction 28 billion yuan ($4.1 billion) of three-year government bonds on Wednesday at a yield around 2.19 percent, mostly in line with those on similiar bonds in the secondary market.
A Reuters poll of 10 traders and analysts at commercial banks, securities firms and mutual funds forecast the yield would came in between 2.10 and 2.30 percent.
"Demand should remain robust for three-year government bonds due to asset allocations by financial institutions," said an analyst at a major Chinese securities brokerage in Shenzhen.
The demand should help offset worries of further rises in China's bond yields as the Chinese central bank let the 28-day and 91-day repo rate to rise in its auctions for the third week in its regular open market operations on Tuesday. [ID:nBJD000945]
Last week, similar worries made the finance ministry fail to fully sell out two government bond issues.
Despite the overall optimism for the coming issue, the market is still worried about tighter liquidity caused by stock initial public offerings (IPOs), which may undermine demand and push the auction yield unexpectedly high, dealers said.
Institutions began subscribing into yuan-denominated shares issued by Sichuan Expressway (0107.HK) on Tuesday for a late listing on the Shanghai Stock Exchange -- the latest in a wave of domestic share IPOs. [ID:nSHA49767]
Large IPOs, such as Sichuan Expressway's, typically attract up to a couple of trillion yuan in subscription funds.
China State Construction said on Sunday it would launch China's fifth-biggest stock IPO worth around $5.9 billion for a listing on the Shanghai Stock Exchange. Subscriptions will be taken next week. [ID:nSHA331173]
After the auction, the new bonds will be issued between July 16 and 20 and begin secondary market trading on July 22. ($1 = 6.83 yuan) (Reporting by Li Hongwei and Eric Burroughs; Writing by Lu Jianxin)
