China Seeks to Curb New Bond Sales by LGFVs With Increased Debt

China’s municipal bond regulator is taking new steps to curb debt sales by local government borrowers, which is likely to increase refinancing pressure on weaker issuers. The tighter issuance/refunding environment may worsen credit conditions for at-risk municipalities as they try to roll over existing notes.

Analysis

China’s municipal bond regulator is taking new steps to curb debt sales by local government borrowers, which is likely to increase refinancing pressure on weaker issuers. The tighter issuance/refunding environment may worsen credit conditions for at-risk municipalities as they try to roll over existing notes.