Chinese Local Debt Shunned as 50,000 Auditors Probe Provinces

Global investors are wary of Chinese local government debt just as the nation’s provinces start going overseas for fundraising amid state scrutiny.

Qingdao City Construction Investment Group Co., a local government financing vehicle on the country’s east coast, sold a debut issue of U.S. dollar-denominated bonds on Feb. 5, raising $800 million in a two-tranche sale. Some 20 percent of the $500 million portion was bought by money managers, compared with an average 54 percent take-up for a $1 billion offshore deal by Beijing Infrastructure Investment Co. in November, people familiar with the matter said.