A total of 191 billion yuan of local government bonds, including 131.8 billion yuan of general bonds and 59.2 billion yuan of financial bonds for special purpose, were issued across China in March, according to statistics released by the Ministry of Finance (MOF). With regards to the purpose, all of them were bonds for swap.
Statistics showed that in the first quarter of this year, a total of 219.5 billion yuan of local government bonds, including 142.6 billion yuan of general bonds and 76.9 billion yuan of financial bonds for special purpose, were issued in China. With regards to the purpose, all of them were bonds for swap.
The MOF stressed recently that local governments should accelerate swapping the outstanding local government debts. They should issue swapping bonds as early as possible so as to ensure that they can finish swap all the outstanding government debts in form of non-government bonds during the period specified by the State Council.
Analysts indicated that as the deadline for bond swap comes near, governments issued bonds earlier this year. However, they slowed down the pace of supplying local government bonds in March. The bond issuance dropped by 58 percent from 459.9 billion yuan in last March.
Yet the issuance increased this month. Statistics showed that the amount of local government bonds issued in early April has reached 156.2 billion yuan, accounting for nearly 82 percent of that in March, which implied surge in supply of government bonds.
Qiu Zhixin, analyst from fixed income of Citic China Securities, viewed that as issuance of financial bonds for special purposes of land reserves, highway toll and rail transportation as well as bonds for other innovative purposes moved up significantly in 2018, “Chinese-version municipal bonds” are expected to see increase in proportion in primary issuance of local government bonds and will gradually become important part of local government bonds issued by local governments. It is roughly estimated that 1.6 trillion yuan of these bonds will be supplied this year. Therefore, a total of about 4.28 trillion yuan of local government bond will be issued in 2018.
The outstanding local government debts across the country amounted to 16610.1 billion yuan as of the end of March, which was within the limit approved by National People's Congress. Among them, general debts, financial debts for special purposes and government debts amounted to 10435.5 billion yuan, 6174.6 billion yuan and 14964.3 billion yuan, respectively, and existing government debts in form of non-government bonds reached 1645.8 billion yuan.
Officials from the MOF said that outstanding local government debts jumped at the end of March. As for the reason, while according with relevant regulations and implementing the management over quota for local government debts strictly and with approval from provincial governments, some local governments swap the qualified debts as of the end of 2014 into government debts by issuing local government bonds.
Translated by Vanessa Chen
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