China Said to Consider PBOC Lending Tool to Help Local Debt
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China’s central bank is considering expanding a new lending tool in an effort to bolster demand for local-government bonds, as policy makers seek to develop a municipal debt market and avoid a credit crunch.
The People’s Bank of China is discussing letting banks tap its Pledged Supplementary Lending program to buy local-authority debt along with other favored purposes, according to people familiar with the matter who asked not to be named as the talks are private. The PBOC last year channeled 1 trillion yuan ($161 billion) through the PSL facility to China Development Bank for redevelopment of shantytowns.