China Sovereign Debt Sales Surge to Test PBOC Liquidity Support

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The yield on 10-year sovereign bonds rose to its highest since May this week and is on track for its steepest monthly climb since November. Photo: Bloomberg

(Bloomberg) — A surge in Chinese sovereign debt issuance is heaping pressure on the central bank to keep funding conditions loose, as authorities pivot toward stronger fiscal stimulus to spur economic growth.

The Ministry of Finance has sold 1.2 trillion yuan ($164 billion) of central government bonds in September, the highest monthly tally in 2023 and 60% higher than the average for the same period in the past three years, Bloomberg-compiled data show. Issuance surged last week after it raised the amount offered for each tenor and added a new five-year note in auctions.