China regional banks exposed to bond reversal as PBoC sales loom

China’s economy, mired in a property slump and beset by deflation, requires a low interest rate environment to stimulate growth. — Bloomberg

BEIJING: China’s regional lenders are facing growing risks in the nation’s US$4.3 trillion sovereign debt market after an unprecedented bond rally this year prompted a slew of warnings from the central bank.

The lenders, some with over 50% of their assets in bonds, are bracing for potential sales by the People’s Bank of China (PBoC), which is seeking to control risks and cool the market.