Money

ICBC Credit Suisse raises $2b for largest China bond fund

(Agencies)
Updated: 2010-08-13 18:05

ICBC Credit Suisse Asset Management Co raised 14 billion yuan ($2.1 billion) to set up China's largest bond fund as investors seek diversification from volatile stocks, according to a person familiar with the matter.

The ICBC Credit Suisse Double Profit Bond Fund, run by the asset management arm of Industrial & Commercial Bank of China, the world's biggest lender by market value, will buy domestic government debt, corporate bonds, short-term bills and yuan-denominated convertible notes, said the person, who asked not to be named because details haven't been made public.

The Shanghai Composite Index has fallen 21 percent this year on concern growth in the world's third-largest economy is slowing. China AMC Hope Bond Fund, at 7.5 billion yuan, is the nation's largest operational bond fund and returned 1.67 percent this year, according to data compiled by Bloomberg.

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Interest in ICBC Credit Suisse's new fund increased after China's banking regulator said banks should limit the amount of high-interest, loan-based trust fund products they sell to retail customers, the person said. The China Banking Regulatory Commission has said banks should bring these trusts onto their balance sheets by the end of 2011.

The announcement "essentially means a sharp reduction, if not an end, to such products," Wang Tao, a Beijing-based economist at UBS AG, wrote in a note on Friday.

China bonds have gained 1.6 percent this year, according to a composite debt index compiled by Chinabond, the nation's largest debt-clearing house.

Credit Suisse Group AG owns 25 percent of ICBC Credit Suisse, which managed nearly 90 billion yuan as of Dec 31, according to its website. An official in the company's marketing department said he couldn't comment as data on the fund hasn't been formally disclosed.