Banking

CDB can sell risk-free bonds to end 2011: rpt

(Agencies)
Updated: 2010-07-12 15:46

SHANGHAI: China's banking regulator has extended a deadline that allows commercial lender China Development Bank(CDB) to sell risk-free bonds until the end of 2011, two people familiar with the situation said on Monday.

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The China Banking Regulatory Commission's decision to extend the deadline by a year means that CDB, a former policy lender, can still issue bonds that are backed by the central government.

CBRC said last year that bonds issued by CDB by the end of 2010 could be treated as risk-free until maturity.

Sources told Reuters that CBRC had also urged CDB to control the pace of expansion and maintain financial stability, taking into consideration limits in the country's bond markets.

CDB was restructured into a commercial lender after receiving $20 billion from Central Huijin, a unit of China's sovereign wealth fund in 2007.

However, the bank can raise cash only through bond issuance because it has no retail outlets, making it impossible for the bank to take desposits.