Chinese lenders are pricing bonds against the nation's overnight funding cost, signaling its rise as the primary benchmark for the financial system. China Merchants Bank Co. is selling a three-year floating-rate note benchmarked against overnight bond repurchase agreements this week. The offering may raise up to 2 billion yuan ($298 million), marking the first such issuance by a local commercial lender.

This shift reflects the People's Bank of China's ongoing reforms to deepen market-based pricing. The move aligns with broader efforts to transition away from traditional benchmarks toward more liquid, short-term rates. Analysts view the development as a key step in the evolution of China's domestic debt market infrastructure.