PBoC: Monetary Policy Unchanged; CBRC: Lend to Private Borrowers

Bloomberg: China Central Bank Reassures on Policy After Credit Slows

The deceleration in the growth of new yuan loans in April was mainly due to a pick-up in a program to swap high-cost local government debt for cheaper municipal bonds, the People’s Bank of China said in a statement on its website on Saturday. No less than 350 billion yuan ($53.6 billion) of such swaps were conducted last month, while aggregating financing growth was affected partly by a decrease in corporate bond issuance, according to the central bank.

The Chinese statement also notes slower corporate borrowing and a rise in defaults: 央行：稳健货币政策取向并没有改变

The month-on-month drop in TSF, in addition the impact of loan changes, was also affected by a decline in corporate bond financing. April corporate bond net financing 209.6 billion yuan, 509.4 billion yuan less than the previous month, which was mainly affected by the recent increase in bond market defaults, corporate bonds delayed effect, but still more than 48 billion yuan more than last year. It is worth noting that the current scale of social financing statistics do not include local government bonds. From our situation, the local government through the issuance of bonds to obtain financing is also largely used to support the real economy. If local government bonds plus April net financing 1.06 trillion yuan, the scale of social financing will reach 1.82 trillion yuan, up 757.4 billion yuan. After Thus, taking into account seasonal changes and local government bond issuance, debt replacement and other factors, on the whole of the current financial support to the real economy is still strong.

Reuters: China orders banks to clear hurdles slowing private sector lending

According to the document seen by Reuters, the China Banking Regulatory Commission (CBRC) is requiring financial institutions to conduct checks on their implementation of central government directives intended to make it easier for private firms to access bank credit.

It also tells them to work to resolve any problems in cases where lending support to private enterprise is insufficient, including small and micro-businesses.

...The document also called for banks to reduce costs for short-term credit products such as bridge loans, which private firms rely on to stay afloat through tough business cycles, while examining risk in their loan guarantee businesses.

Note this has been a multi-year demand by the central government, which has yet to be fulfilled. See: Li Keqiang Losing War on Financing Costs; 70% of SMEs Have Seen Financing Costs Rise in 2015