As China puts the squeeze on money markets, pushing borrowing rates up across the board, non-bank institutions are being hit especially hard. Bloomberg reports a gap between seven-day repurchase rate fixing and the weighted average rate widened to as much as 2.47% on Wednesday. The gap reflects an effective premium on non-bank financial institutions such as securities and investment firms, which has reached a record high. Hong Kong-based head of strategy at Standard Chartered Plc Becky Liu says that knock-on effects of the premium may include higher company borrowing costs and increased pressure on wealth-management products.
A businessman talks on his mobile phone as he walks in the financial area of Pudong in Shanghai. Photo: Reuters, Carlos Barria
Shadow banks see record premium as China raises borrowing rates
De-leveraging could put pressure on corporate debt, wealth-management products