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China's local gov't slows debt issuance

Xinhua, May 9, 2017 Adjust font size:

Local governments have issued less debt this year following measures to ease the country's mounting debt burden, data showed Tuesday.

In the first four months of 2017, local governments raised 799.4 billion yuan (116 billion U.S. dollars) through 178 instances of debt issuance, down from the 2.02 trillion yuan raised in 296 issuances a year ago, according to data compiled by Wind, a financial information provider.

China's authorities have stepped up efforts to rein in financial risks, promising to correct irregular fundraising behavior by local governments.

In a statement released last week, the Ministry of Finance (MOF) asked provincial authorities to examine their financing practices and rectify all irregularities by the end of July. Progress will be tracked by MOF supervisors.

The measures taken to standardize the financing channels of local governments will help to expose hidden debt, and a clear boundary between local governments and their financing vehicles will improve China's bond yield curve, making it more market-oriented, said Zheng Lianghai, an analyst with Dongxing Securities.

With continued government action against high leverage, the growth of local debt issuance will likely slow further, analysts predicted. Endi