News: According to the latest announcement from the Ministry of Finance, local governments are asked to accelerate the process of issuing local bonds, and should “scientifically” determine the maturity structure of the bonds. The issuance of all new bonds, which are worth of CNY 3.08 trillion, is expected to complete by September 2019.
Quick Take: As China seeks to bolster market growth this year amid economic downturn, great pressure has fallen onto local governments on selling more debt to aid local development, particularly on the financing for infrastructure and constructions. However, considering that many local governments has been facing huge amount of invisible debt which poses tremendous threat of default, such requirement from the central government indeed seems difficult to achieve. The biggest question remains whether the region’s fiscal revenue is able to catch up with its increasing debt; if not, the sustainability of economy would be of serious concern. Now how regional governments would maneuver to accomplish the requirements by September without curbing its balance sheet remains to be seen.