China's Mammoth Policy Banks Feel the Squeeze From Bond Rout
- Reliance on market funding escalates impact on policy banks
- Borrowing cost surge could crimp China Development Bank credit
Photographer: Nelson Ching/Bloomberg
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A $2.2 trillion superbank is feeling the pinch of China’s bond slump.
The yield on China Development Bank’s 10-year bonds surged past 5 percent on Wednesday, bringing the rise this quarter to about 70 basis points. More striking has been the jump in its premium over government debt with a similar maturity, given that the state-owned lender is a so-called policy bank that aligns lending with national goals. The spread surged to 1 percentage point this week, up more than a quarter point just this month.