SHANGHAI, Oct 14: China’s finance ministry auctioned 21.6 billion yuan ($3.53 billion) of three-year bonds on behalf of seven local governments at a yield of 4.25 percent, traders said on Monday.
For a breakdown of which local governments issued which amount of debt, click on:
The finance ministry said in March that it would raise the quota for direct issuance of local government debt to 350 billion yuan this year, up from 250 billion yuan in 2012, under a pilot project launched in 2011.
The quota includes auctions by six local governments authorised to conduct their own auctions, as well as those in which the finance ministry sells bonds on behalf of localities.
Municipal and provincial governments are currently not allowed to raise funds in the debt market directly outside this pilot.
Since 2009, however, local governments have increasingly evaded this restriction by borrowing through state-owned investment companies known as local-government financing vehicles. Such borrowing is technically corporate debt but is widely understood to carry an implicit government guarantee.
The pilot project for direct bond issuance is part of an effort to make local government debt issuance more transparent.
($1 = 6.1206 Chinese yuan)
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