SHANGHAI, Sept 29: China’s central bank plans to issue over 100 billion yuan ($13.3 billion) of three-year bills after next week’s long holiday to absorb funds from the money market, market sources said on Saturday.

The bills are expected to be sold to selected commercial banks through an auction on Oct. 11, the sources said.

The planned bill sale would help to offset a seasonal flow of money back into the banking system after the holiday period, and suggests the central bank is keen to drain excess funds as it tightens policy to curb inflation and rapid loan growth.

It was unclear if the sale would constitute a special issue of bills. The central bank has conducted five issues of special three-year bills so far this year, and it has raised official interest rates about a week after each issue.

Unlike past special issues, the bills to be sold in early October are expected to be freely tradable, which may limit their impact on the money market, the sources said.They predicted the yield on the coming issue would be about 3.95 per cent, reflecting an interest rate hike in mid-September. —Reuters