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China Traders Hold Noses at Plan to Repackage Bad Loans as Bonds

  • `There will likely be no buyers' of the debt: China Securities
  • China said to allow 50 billion yuan of such asset-backed notes
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Bond traders at Chinese banks say they’ll avoid notes backed by the nation’s highest non-performing loans in a decade.

Regulators will allow domestic banks to issue up to 50 billion yuan ($7.7 billion) of such asset-backed securities and Bank of China Ltd. plans its first sale since 2008, people familiar with the matter said last month. Guangzhou Rural Commercial Bank Co. said it wouldn’t be interested in buying debt underpinned by NPLs due to lack of transparency. Guangdong Shunde Rural Commercial Bank Co. said probably only wealth-management departments of lenders would want to add exposure to soured loans.