Exim-Bank of China fails in bond sale

Weak demand causes failure.

The Export-Import Bank of China, one of China’s policy lenders, failed to sell two bonds in their entirety last week, the first such incidents since the end of the cash crunch in June that hammered the nation's financial system and debt markets.

Exim-Bank managed to fetch orders worth only US$1.13 billion for a two-year bond with a previously targeted issuance size of US$1.5 billion. It sold only US$467 million of an originally planned US$1.6 billion seven-year bond.

The weak demand for the two bonds was mostly due to the lower-than-expected interest rates that the issuer was willing to pay for the new debt, analysts said.

They noted Exim-Bank’s incomplete bond sales suggest a market still nervous about volatile funding conditions and concerned with an uncertain outlook for the country's monetary policy.

Before the sales, Exim-Bank had set an upper limit of 4.3359% for the targeted yield on its two-year bond with 4.4545% for the seven-year tranche. The two bonds were eventually both sold at the upper limits of the targeted yields.