China’s local traders are borrowing a record amount of short-term cash, in a sign they are leveraging up returns in a stable bond market.
Turnover in so-called pledged repurchase trades surged past 8 trillion yuan ($1.2 trillion) to an all-time high Thursday, according to calculations by Bloomberg. The figures are used as a gauge of leveraged activity in bonds, even if the transactions also include the day-to-day financing needs of firms in the market.
The record comes amid falling borrowing costs after the People’s Bank of China cut lenders’ required reserve ratios in late March to support credit growth.
Source : Chinese Traders Borrow Trillions to Boost Bond Market Returns