China seen selling 10-year bonds around 4.33 pct

SHANGHAI, June 19 - China's Ministry of Finance is expected to auction 26 billion yuan of 10-year bonds on Friday at a yield of around 4.33 percent, traders and analysts said on Thursday.

A Reuters poll of eight traders and analysts at commercial banks, securities and insurance firms predicted the yield would come in between 4.30 and 4.40 percent, with a median of 4.33 percent.

The median is slightly above Thursday's indicative secondary market yield of 4.3155 percent bid for 10-year government bonds <CN10YTFIX=R>, according to Reuters Reference Rates.

Traders said that although money market liquidity was fairly good and insurers had portfolio requirements to buy long-term bonds, market sentiment had been hit by this month's larger-than-expected reserve ratio hike, which implied a likelihood of more monetary tightening down the road.

"Liquidity isn't especially tight right now, so we think investors can get the bonds at around a 4.35 percent yield tomorrow," said a trader a Chinese bank in Shanghai. (Reporting by Qu Weizhi; Writing by Karen Yeung; Editing by Andrew Torchia)

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