Change in loan policy spurs rate swaps to new highs

China's interest-rate swaps climbed to a three-month high and bonds dropped after a policy change narrowed the pool of corporate debt that can be used as collateral for short-term loans.

China Securities Depository and Clearing Corp stopped accepting new applications for repurchase agreements that involve notes rated below AAA or sold by issuers graded lower than AA, according to a statement posted on the agency's website on Monday.

The move means that about 470 billion yuan ($76 billion) of outstanding corporate bonds that are regulated by the National Development and Reform Commission, the top economic planner, can no longer be pledged for repos, according to Haitong Securities Co.