China Local Governments Are Finding It No Longer Cheap to Borrow

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China Local Governments Are Finding It No Longer Cheap to Borrow
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(Bloomberg) -- China’s local authorities are finding it more expensive to sell bonds, the latest sign of rising stress as policymakers ramp up borrowings to ...

-- China’s local authorities are finding it more expensive to sell bonds, the latest sign of rising stress as policymakers ramp up borrowings to stimulate growth and defuse short-term payment risks.Of the local government yuan bonds sold so far this year, 50 carry coupons with a premium of more than 25 basis points with comparable sovereign debt, according to Bloomberg-compiled data. That’s the most since 2020.

“Banks are already well fed after absorbing a large amount of local government bonds,” said Liu Lin, deputy general manager of investment banking at Bank of China Ltd. “Pricing may need to better reflect the market dynamics in the fourth quarter.” The Standing Committee of the Communist Party-controlled parliament will meet later this month to review a bill assigning additional local government debt quotas “in advance,” the state-run Xinhua News Agency reported Friday, another move that will allow China to increase the amount local governments can borrow.

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