China Exim 2-year bonds yield 2.55 pct -traders

SHANGHAI, Nov 5 - China Export-Import Bank auctioned 10 billion yuan ($1.5 billion) of two-year bonds in the interbank market on Thursday at a yield of 2.55 percent, traders said.

That compares with a 2.31 percent yield on bonds sold by Exim Bank with the same tenor on Sept. 15. The bid-to-cover ratio for Thursday's issue was a strong 2.3 times, traders said.

Traders had expected strong demand at the auction because, while China's economic recovery is fuelling expectations of an eventual unwinding of ultra-loose monetary policy, the market expects the central bank to remain cautious in the pace and extent of that shift.

The central bank sold three-month and one-year bills at unchanged yields in this week's open market operations again, signalling that it is still taking a breather in guiding up money market rates up.

Exim Bank, a policy bank which lends in line with government initiatives, has the option of increasing the issue by as much as 5 billion yuan if demand proves strong. It was not immediately known whether the option was exercised. ($1=6.82 yuan)