REFILE-Five submit binding offers for use of Greece-Bulgaria gas link
SOFIA, Dec 3 Five binding offers were submitted for the use of the natural gas pipeline between Bulgaria and Greece, the joint venture building the link said in a statement.
* Money rates ease despite large PBOC fund drains * But conditions will tighten in coming weeks * Required reserves, tax payments will drain funds * PBOC seen sticking to tight liquidity policy in Q1 * Impact of U.S. QE tapering to be gradually felt in 2014 By Lu Jianxin and Gabriel Wildau SHANGHAI, Feb 14 China's money rates slumped by around 100 basis points this week as funds flowed back into the banking system following the week-long Lunar New Year holiday, offsetting a large liquidity drain by the central bank, traders said. The benchmark seven-day bond repurchase rate tumbled 104 bps from the end of last week to 4.4 percent on a weighted-average basis. The 14-day repo rate slumped 110 bps to 4.56 percent, while the overnight repo rate was down 100 bps at 3.26 percent. The People's Bank of China (PBOC) skipped regular open market operations this week, allowing maturing reverse repos to automatically drain 450 billion yuan ($74.2 billion) from the markets. "Cash still flooded the markets today," said a dealer at a Chinese commercial bank in Shanghai. "But liquidity conditions will soon tighten, with banks putting aside more reserves and companies paying taxes in the second half of this month." The rebound in bank deposits following the holiday means that banks will have to put aside more reverses at the PBOC on the 15th of the month. To stay in compliance with the required reserve ratio, commercial banks must adjust their central bank reserves on the 5th, 15th, and 25th of each month in line with changes in their deposit balances. February is also typically one of the months when companies settle income tax liabilities from the previous year, traders said. That will also drain funds from the banking system as cash flows out of commercial banks into fiscal deposits held at the central bank. Traders say liquidity may remain relatively tight in the weeks ahead as the PBOC maintains the tight-money stance it initiated last June. The central bank is trying to clamp down on excessive credit creation through the shadow banking system, traders said. "Since 2013, interest rates in financial markets have generally risen with sharper volatility..., reflecting a 'conflict' between excessively strong demand for liquidity and appropriate supply," the PBOC said in its latest quarterly monetary policy report published over the weekend. "In the next stage, the central bank will further improve its liquidity management models with a combination of quantity and pricing tools with prudent macroeconomic policy," it said, in a statement traders said signals a continuation of the tight liquidity stance. Traders also expect the impact from the U.S. Federal Reserve's decision to reduce its bond buying program to produce a gradual tightening effect over the course of 2014. Reflecting these factors, many traders expect the seven-day repo rate's 250-day moving average to rise about 50 bps to 4.5 percent in the first half of this year, from around 4.0 percent in late 2013 and 3.5 percent in mid-2013. SHORT TERM RATES: Instrument RIC Rate* Change (weekly, bps)** 1-day repo 3.26 -100 7-day repo 4.40 -104 14-day repo 4.56 -110 7-day SHIBOR 4.44 -97 *The volume-weighted average price (VWAP) at midday Friday ** Compared to the VWAP at market close the previous Friday KEY INTEREST RATE SWAPS: Instrument RIC Rate Spread (bps)* 2 yr IRS based on 1 2.9588 -4.12 year benchmark 5 yr 7-day repo swap 4.86 +186 1 yr 7-day repo swap 4.74 +174 *This spread can be seen as a proxy for forward-looking market expectations of an interest rate cut or rise. GOVERNMENT BOND FUTURES Instrument RIC Price Change (weekly, pct) Mar 2014 5 yr 92.520 +0.03 Jun 2014 5 yr 92.920 +0.11 Sep 2014 5 yr 93.132 +0.09 >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> MARKET DRIVERS - Tax man attack on shadow banking startles markets - China eases Jan credit squeeze with cash, surprising transparency - Market braces for bouts of tight liquidity in 2014 - Beijing eases corporate debt rules to offset crackdown - China corporate financing squeezed as reform plans spark rate spike DATA POINTS - Fiscal deposits drive interbank liquidity trends GRAPHIC: link.reuters.com/pem75t - China hot money tracker: Hot money inflows slow to a trickle in Dec 2013 GRAPHIC: link.reuters.com/saz74t - Maturing central bank bills and repos upcoming GRAPHIC: r.reuters.com/vyr95t - Chinese government bond curve rises on rate reform expectations GRAPHIC: link.reuters.com/jyr95t - China's interest-rate swap curve rises, flattens on liquidity fears GRAPHIC: link.reuters.com/ryr95t - China corp bond spreads widen on risk aversion GRAPHIC: link.reuters.com/bas95t >>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>>> ($1 = 6.06 Chinese yuan) (Editing by Kim Coghill)
NEW YORK, Dec 3 The United States "absolutely must" complete unfinished work ending the too-big-to-fail bank problem that helped plunge the global economy into recession eight years ago, an influential Federal Reserve policymaker said on Saturday.