(Corrects fourth paragraph of story originally published June 28 to show Chen Yuan is former chairman.)
June 28 (Bloomberg) -- China Development Bank Corp.’s bonds will keep their zero risk weighting on the books of Chinese commercial banks, Vice President Li Jiping said, holding down borrowing costs for the world’s largest policy lender.
There is a debate over whether CDB should become a commercial bank or a development bank with commercial operations, senior adviser Di Weiping said in April. CDB doesn’t take deposits and the zero risk weighting means holders of its bonds don’t need to set aside additional capital to cover potential losses.
“Our bonds will continue to have zero risk weighting,” Li said on the sidelines of the Lujiazui Forum in Shanghai today. “I can’t say whether that will be the case forever, but it should remain so for the foreseeable future.
Former Chairman Chen Yuan, son of one of Communist China’s founding fathers, built an institution bigger than the World Bank and created a system of local financing for infrastructure projects that helped cushion China from the global financial crisis. Premier Li Keqiang is relying on CDB to achieve the government’s policies of urbanization and cutting pollution.
The China Banking Regulatory Commission said last April that investors may continue to categorize the bank’s debt as zero risk until the end of this year.
China Development Bank sold the most bonds of any policy bank last year, raising 1.23 trillion yuan, according to data from Chinabond, the nation’s bond clearinghouse.
To contact the editor responsible for this story: Chitra Somayaji at firstname.lastname@example.org