China central bank issues window guidance to restrict NCD issuance: sources

SHANGHAI (Reuters) – China’s central bank has moved to restrict the issuance of negotiable certificates of deposit (NCDs) this year, two sources with knowledge of the matter said on Friday, as the government intensifies its deleveraging campaign.

The People’s Bank of China (PBOC) advised banks via so-called “window guidance” to follow a new formula capping NCD issues during the year.

Applications for quotas to issue NCDs would be rejected if an applicant’s interbank borrowings plus the requested amount of NCD quotas exceeded one-third of its total liabilities, the sources said.

Window guidance refers to informal instructions from regulators that are often communicated orally with no written notice.

The PBOC had yet to respond to a Reuters request for comment on the matter.

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