The benchmark seven-day repurchase rate will average 2.65% in the first quarter, up from 2.47% in the current period and the highest since the start of 2015, according to the median estimate in a Bloomberg survey of 24 bond traders, investors and analysts. More than half the respondents are expecting a record selloff in China’s $7.9 trillion debt market to last until at least the end of March, with the government’s deleveraging push and tighter monetary conditions looming as the biggest risks. The average interbank repo rate surged to a 20-month high on Dec. 16 on a combination of year-end cash demand and mounting concern over counterparty risks after a brokerage reportedly declined to honor its bond trading agreements. China’s debt market is heading for its biggest monthly decline in at least a decade.
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