* PBOC injects 950 bln yuan of MLF, biggest on record * One-year MLF rate at 2.95%, unchanged for 8 straight month * Huge cash injection meant to soothe market nerve - analysts * LPR expected to stay steady at Dec fixing next Mon - traders (Recasts, adds details, comments and background) SHANGHAI, Dec 15 (Reuters) - China’s central bank made its biggest ever injection of medium-term funds on Tuesday to shore up liquidity, after recent corporate bond defaults shattered investor confidence and scuppered new issuances. The People’s Bank of China (PBOC) said in a statement it had issued 950 billion yuan ($145 billion) worth of one-year medium-term lending facility (MLF) loans to financial institutions to keep the “banking system liquidity reasonably ample”. It kept the interest rate unchanged for an eighth straight month at 2.95%. Market players expect no change in the benchmark loan prime rate (LPR) at its monthly fixing next Monday. The injection comes on the heels of high-profile defaults by top-rated state-owned enterprises last month that sparked heavy selling in the corporate bond market. The defaults prompted investigations into issuers and underwriters and widespread cancellation of bond issuance, weighing on credit growth. “We’ve seen so many cancelled issuances, particularly from local government entities and such that clearly need the funds, so I think until that gets back to normal we’ll probably continue to see the PBOC on a slightly more accommodative stance,” Thomas Gatley, China corporate analyst at Gavekal in Beijing, told Reuters. The PBOC has made two cuts to the borrowing cost of MLF loans this year totalling 30 basis points, while the fresh fund injection far exceeds two batches of MLF loans worth a total of 600 billion yuan set to expire in December. The latest injection has eased some worries about liquidity at the year end, when demand for cash typically rises, traders said. The move comes even as senior central bank officials repeatedly raise the topic of exiting monetary easing policies. Dollar/yuan swap points fell after the huge cash injection, with the one-year tenor easing to the lowest in more than four months. Key interbank borrowing costs also eased. The PBOC move is aimed at keeping the bond market stable while keeping long-end market liquidity reasonably abundant, said Yan Se, chief economist at Founder Securities in Beijing. “Further widening of the yield spread between China and the United States will affect foreign exchange and exports,” Yan said. “Therefore, we believe that (the authorities) should be cautious about raising interest rates.” The PBOC also said it injected another 10 billion yuan via seven-day reverse repurchase agreements on Tuesday, keeping the rate unchanged. The MLF, among PBOC’s main tools in managing longer-term liquidity in the banking system, serves as a guide for the LPR, which is set monthly using assessments from 18 banks. ($1 = 6.5480 Chinese yuan) (Reporting by Winni Zhou, Andrew Galbraith and Se Young Lee; editing by Richard Pullin and Himani Sarkar)