China will allow provincial-level governments to raise about 1 trillion yuan ($139 billion) via bond sales to repay the debt of local-government financing vehicles and other off-balance sheet issuers, a small step toward addressing one of the biggest threats to the nation’s economy and financial stability.
The Ministry of Finance has informed relevant authorities about the “refinancing bonds” program, people with knowledge of the matter said, asking not to be identified as they aren’t authorized to discuss the program. The quota has been set for each region, one of the people said, without providing further details on sizing.
All provincial-level governments but Beijing, Shanghai, Guangdong and Tibet will be able to use the bonds to repay off-balance sheet liabilities, known as “hidden” debt in China, according to one of the people. Authorities also identified 12 provinces and cities as “high-risk” areas where more support will be provided — including the provinces of Guizhou, Hunan, Jilin and Anhui, as well as Tianjin city, one person said.
Read the full story on Bloomberg here.