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China Development Bank Marketing Sale of First ABS Since 2008

Aug. 31 (Bloomberg) -- China Development Bank Corp., the nation’s largest policy bank, plans to issue 10.2 billion yuan ($1.6 billion) of asset-backed securities in its first such offering since 2008, according to a sale prospectus.

The bank will sell the securities in six tranches with CITIC Trust Co., part of state-owned Citic Group Corp., it said in the document filed with the Shanghai Clearing House today. Four tranches of notes are rated AAA and one is rated AA while the other is a subordinated tranche, it said.

China Development Bank last sold asset-backed securities in April 2008, as the global financial crisis deepened, according to data compiled by Bloomberg. CDB and China Construction Bank Corp. sold 7.2 billion yuan of asset-backed bonds in December 2005 in the first such deal for financial institutions in the country.

Asset-backed securities, or ABS, are notes backed by financial assets. Banks in China were permitted to begin selling them again after the regulator suspended an issuance program in 2008 in the wake of the financial crisis, Moody’s Investors Service said in a report on June 11.

CDB’s notes are backed by 49 loans from 43 borrowers, according to the prospectus. Eighteen of the loans are rated AAA and 12 are rated AA+. The lowest rating of any of the loans is A and the highest interest rate is 7.32 percent.

About 40 percent, or 19 loans, are in industries including electricity, heat generation and suppliers. Seven are in railway transport, according to the prospectus.

To contact Bloomberg News staff for this story: Henry Sanderson in Beijing at hsanderson@bloomberg.net

To contact the editor responsible for this story: Shelley Smith at ssmith118@bloomberg.net

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