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China rates China Development Bank bonds as risk-free indefinitely

[BEIJING] China's bank regulator has decided to rate bonds issued by China Development Bank Corp (CDB) as effectively risk-free in the "long run", the bank said on Thursday, a move that cements CDB's role as the country's biggest policy bank.

CDB said on its website the China Banking Regulatory Commission's decision to classify CDB bonds as "zero risk-weighting" would apply to its bonds denominated in yuan and foreign currencies.

While CDB bonds have been rated effectively risk-free in the past by the bank regulator, the status was subject to a review every few years as part of efforts to turn the bank into a commercial entity, some analysts said.

But the regulator's latest decision to label CDB bonds as risk-free for an indefinite period marks the bank's return to its role as a policy bank, they said.

With assets of more than 10.3 trillion yuan in 2014, CDB dwarfs the World Bank and is responsible for funding China's urbanisation drive, such as building roads, public housing, power and water treatment plants.

The bank also helps to finance the overseas expansion of some Chinese firms, such as Huawei Technologies, by extending loans to them.

CDB said in its statement it would continue to issue bonds and raise funds to finance China's economic and social development.