China Development Bank, a state-run policy bank that funds government-backed infrastructure projects, abruptly cancelled a combined eight billion yuan sale of asset-backed securities after failing to attract enough investors.
Sources said investors shunned the deal because they sought higher yields than the ones offered by the bank's issues.
'The sale did not attract sufficient demand for the AAA-rated tranche,' a source familiar with the deal said.
The deal featured a 7.2 billion yuan triple-A tranche, a 445 million yuan single-A tranche and a 365 million yuan unrated tranche that carried the highest risk, the sources said.
The bank will try to resell the bonds later, a source said, declining to give a time frame.
An asset-backed securities sale, or securitisation, features a number of different bonds that pay an interest rate depending on how risky the assets are perceived to be by investors. The triple-A group of bonds carry the highest-quality assets and therefore pay the lowest interest rate.
In a typical securitisation sold by a bank, investors are paid a yield based on the interest payments of debtors from a basket of loans. The sale allows banks to recoup capital earlier intended for further lending or other investments.
