(Yicai) Jan. 8 -- The interest rates on the transfer of banker’s acceptances issued by Chinese state-owned and joint-stock banks have jumped since the beginning of the year.

The interest rates for the transfer discount of three-month banker’s acceptance bills rose to 1.47 percent on Jan. 6 from 0.3 percent on Dec. 30, while that of six-month banker’s acceptance bills increased to 1.29 percent from 0.6 percent.

The New Year holiday run from Jan. 1 to 4, during which trading was halted. The above figures compare Jan. 6 to Dec. 30 to eliminate possible fluctuations from direct quotes on the last trading day of last year and the first trading day of this year.

Banker’s acceptance bills are financial tools used by companies as a relatively safe payment option because they are guaranteed by state-owned or joint-stock banks. They can be traded at a discount to face value in the money markets to quickly obtain funds.

Given that bills have both monetary and credit attributes, banks increase bill purchases to meet credit scale targets when they have strong credit growth demand, driving up bill interest rates. Meanwhile, when they have weak credit demand, banks sell bills to issue loans, boosting bill supply and leading to a decline in bill interest rates.

The sharp rise in banker’s acceptance bills interest rates at the beginning of this year following fluctuations at the end of last year is in line with institutions issuing more credit this month, according to analysts.

At the beginning of January, the supply of bills in the primary market dropped, and companies’ willingness to discount bills was moderate, creating relatively weak pressure to sell bills, according to a report by Purang Financial Services. From the demand perspective, market trading activity was sluggish, and the buying sentiment was cautious. Under bullish expectations, some buyers may buy bills at higher prices.

Despite this, credit predictions for December remain conservative due to the low banker’s acceptance bill interest rates.

“The increase in invoice financing in December will likely stay at a high level, and the leverage effect of the new policy-based financial tools on the medium- and long-term corporate credit demand will be gradually manifested,” said Ni Jun, chief banking analyst at GF Securities.

He predicted last month’s increase in Chinese yuan-denominated loans under the social financing scale to shrink by CNY50 billion (USD7.2 billion) to CNY790 billion (USD113.08 billion) from a year earlier.

The growth in social financing and money supply will continue to slow down in December, according to the latest report by China International Capital Corporation.

“The bill interest rates rebounded in December, which may indicate that loans issued picked up thanks to policy support,” CICC said in the report. “We expect new loans to reach CNY900 billion, with the net issuance of government bonds reaching CNY500.2 billion, a significant decline from a year earlier.”

CICC also predicted CNY1.84 trillion (USD263.37 billion) in new social financing in December, down by CNY1 trillion from the same period last year, and that social financing growth will drop to 8.2 percent.

Looking ahead, Purang Financial Services estimated that banker’s acceptable bill interest rates will continue to rise, with fluctuations in the near future under the supply and demand dynamics.

Editor: Futura Costaglione