2023-08-11 11:40:28
China allows provincial-level local governments to raise regarding 1 trillion yuan (regarding 20 trillion yen) through bond issuance to repay debts by financing entities (LGFVs) and other off-balance-sheet issuers. do. We have taken small steps towards addressing the biggest threats to economic and financial stability.
China’s finance ministry has notified relevant departments regarding the “refinancing bond” program, said a person familiar with the matter. Limits are set for each region. The officials requested anonymity because they were not authorized to speak.
All provincial-level governments, except Beijing and Shanghai, Guangdong and Tibet, have used bonds issued under the program to pay off off-balance-sheet debt, known as “hidden debt,” according to one of the people involved. can be used.
Authorities also identified 12 provinces and cities as “high-risk” areas. Guizhou, Hunan, Jilin and Anhui provinces as well as the city of Tianjin will be affected and will receive further assistance, one of the people said.
The move is a practical bailout for weaker issuers, including LGFV, and shifts the burden of debt to local governments.
China’s LGFV Debt Burden by Provinces
Firms in nation’s southwest, north face higher bond financing costs, shorter maturity
Source: Founder Securities Co., Bloomberg
The Finance Department did not respond to Bloomberg News’ request for comment.
The Communist Party’s top leadership, the Central Politburo, said at a meeting a few weeks ago that it would use a package of policies to help solve local government debt problems.
news-rsf-original-reference paywall">Original title:China to Shift $139 Billion of LGFV Debt to Provinces (2)(excerpt)
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