China’s Guangdong Province Tests Novel Way of Pricing Government Debt

Guangdong, which accounts for about 7% of China’s outstanding local government debt, plans to sell 10 billion yuan of bonds Nov. 15

(Bloomberg) — The biggest issuer in China’s 34 trillion yuan ($4.7 trillion) local government bond market is testing a new approach to pricing debt, one that’s seen encouraging greater pricing differentiation among provinces.

China’s southern trading hub of Guangdong set the minimum yield requirement for a coming debt offering benchmarked to the Finance Ministry’s local government bond yield curve. That would be the first time such debt isn’t priced off sovereign notes.