China Dev Bank 5-yr bond yield near top of fcast

SHANGHAI, Nov 5 - China Development Bank [CHDB.UL] sold 20 billion yuan of five-year bonds on Thursday at a yield of 3.75 percent, towards the top end of market forecasts.

The auction result compares with a median forecast of 3.67 percent in a Reuters poll of seven traders and analysts at commercial banks, fund companies and securities houses; forecasts ranged from 3.54 to 3.80 percent.

The result comes in well above Wednesday's indicative secondary market yield of 3.6092 percent bid for five-year financial bonds issued by policy banks <CN5YSFIX=R>, according to Reuters Reference Rates.

Most traders had expected fairly good demand at the auction because loose money market liquidity was expected to offset concern on a sustainable economic recovery, causing the central bank to eventually unwind its ultra-loose monetary policy.

But a few had said investors are increasingly asking for a premium in bonds issued by CDB to compensate for their falling tradeability after it was converted into a joint-stock bank in December, a step by the government to commercialise CDB.

Market forecasts had fallen in a wide range, suggesting a divergence of views even though CDB early this year said its reform along commercial lines would not increase the credit risk of its bond issues, which should still be considered as financial bonds issued by a government policy bank. (Reporting by Bella Zeng and Karen Yeung; Editing by Jacqueline Wong)