China Doubles Local Government Debt Swap Quota to Ease Risks

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China granted another 1 trillion yuan ($161 billion) quota to provinces to swap high-interest debt into low-cost bonds, doubling the previous amount.

The expansion, which brings a quota first issued in March to 2 trillion yuan, is an important measure to stabilize growth and prevent risks, the Ministry of Finance said in a statement.

Increasing the amount of debt local governments can swap will help cut risks from a record surge in borrowing used to fund a glut of investment projects. The process -- which includes inducements for banks to buy new, longer-maturity, lower yielding bonds -- is alleviating a funding crunch among provinces that had threatened to deepen the economy’s slowdown.

— With assistance by Li Liu, and Gregory Turk

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