19 September 2018

Municipal bonds eyed to clean up local govt debt, paper says

China is looking to expand a trial program that allows local governments to issue municipal bonds, as part of efforts to reduce risks in the nation’s financial system, the Shanghai Securities News reported Monday, citing a reform plan unveiled after the Communist Party Central Committee’s recent plenum. The use of municipal bonds could address the problem of lack of transparency under the current financing models adopted by local governments, which usually set up financing vehicles to issue bonds or borrow from banks, akin to off-balance sheet debt, as current Chinese law bans local governments from selling debt directly, the report said. Wenzhou in eastern China’s Zhejiang province is already studying the feasibility of such debt issue, the paper said.

– Contact HKEJ at [email protected]



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