Court Ruling Adds to Pressure on China’s Indebted Local Government Financing Vehicles

Two Shanghai courts have threatened to take action against a large local government financing vehicle (LGFV) in Yunnan province for defying a court order to repay 330 million yuan ($48.8 million) in debt, according to a ratings agency report.

The rulings are one of the latest signs of financial stress on China’s multitude of LGFVs, whose failure to repay their debts could spread to local governments that are already feeling the pinch from an unprecedented real estate credit crisis.