China fin min fails to sell out short-term bonds

SHANGHAI, July 10 - China's Ministry of Finance failed to sell out its short-term bonds on Friday, traders said.

The ministry sold 12.48 billion yuan ($1.8 billion) of 91-day bonds at a yield of 1.15 percent, after offering 15 billion yuan ($2.2 billion) of such bonds.

The ministry also sold 12.65 billion yuan of 273-day bonds at a yield of 1.25 percent, after offering 20 billion yuan of such bonds.

The auctions follow Wednesday's similarly undersold sale of one-year bonds by the finance ministry, which was the first undersubscribed government bond auction since 2003.

Traders said demand had been undermined by the central bank's decision to resume one-year bills and rise in the rates of its short-term bond repurchase agreements at this week's open market operations that signal it was tightening monetary policy slightly.

The weighted seven-day repurchase agreement rate slipped to 1.2294 percent early on Friday from the previous close of 1.2314 percent, reflecting that liquidity conditions are actually very loose. ($1 = 6.83 yuan)