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Treasury notes gain in reaction to cuts in rates

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The first batch of three-year treasury notes listed after Friday's interest rate cuts have risen 5.86 per cent on their debut, to 105.86 yuan (about HK$98.44).

Traders said the rise was expected because of the cut of 1.5 percentage points on average for deposits and 1.2 points for loans.

At 105.86 yuan, the notes carried a yield of 8.67 per cent - slightly higher than the interest of 8.28 per cent paid on three-year time deposits, but lower than the nominal yield of 10.96 per cent.

The 30 billion yuan of debt securities each have a face value of 100 yuan.

When trading opened yesterday morning, the notes shot up to 106.80 yuan, later reached a high of 107 yuan on a burst of buying pressure before profit-taking by underwriters pushed the price down by about one yuan to 105.86 yuan at the afternoon close.

Sellers mostly were brokerages in the 60-member underwriting syndicate.

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