Beijing Tightens Bond Rules at Local Level
Total outstanding local government debt reached 15.86 trillion yuan ($2.35 trillion) as of June 30, slightly higher than the 15.32 trillion yuan at the end of 2016 and below 2016’s ceiling of 18.82 trillion yuan set by the Ministry of Commerce, official data showed. Photo: VCG
Chinese regulators have banned companies from pledging public assets such as land resources when they apply for bond issuance, in a bid to cut local debt-related risks.
The National Development and Reform Commission (NDRC), China’s top economic planning body, and the Ministry of Finance jointly published new directives on Monday that bar urban development investment corporations, also referred to as local government financing vehicles (LGFVs), from counting land-usage rights and other public infrastructure assets such as schools, hospitals and public squares as part of their assets when they file requests to issue bonds.
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