Caixin
Sep 16, 2022 08:31 PM
BUSINESS

Local Government Financing Vehicles Struggle to Pay Their IOUs

At the end of August, 43 LGFVs had failed to redeem maturing commercial paper at least three times over the previous six months, according to analysts. Photo: VCG
At the end of August, 43 LGFVs had failed to redeem maturing commercial paper at least three times over the previous six months, according to analysts. Photo: VCG

A growing number of Chinese local government financing vehicles (LGFV) are failing to repay money they owe to suppliers in the form of commercial paper debt, according to some analysts, underscoring growing financial stress among companies tasked with raising funds to support infrastructure investment.

At the end of August, 43 LGFVs — including parent companies and subsidiaries — had failed to redeem maturing commercial paper at least three times over the previous six months, analysts at Lianhe Credit Investment Consulting Co. Ltd., a consultancy, wrote in a note last week based on data from Shanghai Commercial Paper Exchange. That’s up from 27 at the end of July.

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