China Bubble: Oops, China’s Debt Markets Suffers from Cash Squeeze

While clueless mainstream media and their experts continues to fixate on the so-called “FED tapering” and foreign money exodus, widening cracks in China’s property bubble appears to have percolated into her debt markets as the Chinese debt markets suffers from lack of funding. 

The consequence: higher interest rates

From Bloomberg: (bold mine)

China’s Finance Ministry failed to sell all of the debt offered at an auction for the first time in 23 months owing to a cash squeeze, according to two traders at finance companies that participate in the sales.

The ministry sold 9.53 billion yuan ($1.55 billion) of 273-day bills, less than the 15 billion yuan target, they said. The seven-day repurchase rate, which measures interbank funding availability, has more than doubled in the past month to 6.81 percent, as banks hoard cash to meet quarter-end capital requirements.

The average yield at the sale was 3.76 percent, said the traders, who asked not to be identified. That compares with yesterday’s 3.14 percent rate for similar-maturity existing securities, according to data compiled by Chinabond, the nation’s biggest debt-clearing house. The ministry’s last failed auction was a sale of 182-day bills in July 2011.

More signs of the deepening credit strains worldwide.

Caveat emptor