China conducts 2021 first central bank bills swap

The People’s Bank of China, the central bank, says it will conduct this year’s first Central Bank Bills Swap (CBS) operation on Friday to improve the liquidity of perpetual bonds issued by commercial banks.

The CBS, valued at five billion yuan (about 772.7 million U.S. dollars), is open to primary dealers for bidding at a fixed rate of 0.1 per cent, the central bank said in a statement.

It said that the swap would be due on April 29.

The CBS scheme allows dealers to swap the perpetual bonds they hold for central bank bills, which would boost market demand for perpetual bonds but have a neutral impact on liquidity in the banking system.

Perpetual bonds are fixed-income securities with no maturity date and are not redeemable but pay a steady stream of interest in perpetuity.