China's urban financing vehicle (UFV) bond offerings grew 12.84 billion yuan over July to 105.48 billion yuan in August thanks to local governments' expanding debt replacement scheme, according to statistics from Wind Info, a Chinese financial data and analysis service provider, Wednesday.
UFV bonds are debts sold by local governments' funding platforms in China. Xu Gao, an analyst of Everbright Securities said that at present, the increasing debt replacement size of Chinese localities and lingering economic growth risks had gradually strengthened UFV bonds' credit advantages over other corporate bonds and pressed their yields down notably.
In August, yields of UFV bonds, which move inversely with their prices, have declined all the way from 4.54 percent to 4.08 percent. Huang Wentao, chief bond analyst of China Securities, held a similar view, saying that Chinese local governments' ongoing debt replacement, meaning to replace their existing debts with new bond issues, has significantly lowered UFV bonds' systemic risks.
In future, China's UFV bonds issues are likely to further accelerate so as to help localities stabilize and fuel up infrastructure investment, say many researchers.
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