Part 3/11:
This record issuance is contributing to a liquidity squeeze as banks struggle to absorb the influx of securities. Money market rates have increased sharply because the People's Bank of China (PBOC) has adopted a tight liquidity stance, curbing major monetary easing measures. This surge in bond issuance follows China’s approval of a debt swap plan, allowing regional governments to restructure 6 trillion yuan of hidden debt over a three-year span. This pivotal strategy aims to lessen interest payments and mitigate the financial pressures faced by local governments, many of which are nearing bankruptcy.