China Dev Bank 20-year bond yield above forecast

SHANGHAI, June 30 - China Development Bank sold 20 billion yuan of 20-year bonds on Tuesday at a yield of 4.60 percent, well above the market forecast, traders said.

The median forecast for the yield was 4.48 percent in a Reuters poll of 10 traders and analysts at commercial banks and securities firms; forecasts ranged from 4.4 to 4.5 percent.

The result was well above Monday's indicative secondary market yield of 4.3680 percent bid for 20-year financial bonds issued by policy banks <CN20YSFIX=R>, according to Reuters Reference Rates.

Late on Monday, lead underwriter Guotai Junan Securities had set a cap of 4.80 percent on the yield.

Traders had expected demand for bonds with such a long tenor to be undermined by increasing optimism about China's economic recovery and concern over the risk of consumer price inflation rebounding later this year.

Secondary market debt yields have also been rising moderately across the curve in the past week because of expectations of tighter liquidity as authorites resumed initial public equity offers this month after a nine-month suspension. (Reporting by Steven Bian and Karen Yeung; Editing by Edmund Klamann)