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Local Governments Beat Corporate Debt on Loan Ease: China Credit

Bonds sold by the funding arms of China’s local governments are providing higher returns than the rest of the corporate debt market as regulators signal that they may be given more time to repay 4.5 trillion yuan ($708 billion) of debt due by the end of 2012.

Seven of the nation’s 10 best-performing corporate bonds in October are from companies set up by regional authorities to fund infrastructure projects, with Yixing City Development Investment Co. returning the most at 10 percent, according to data compiled by Bloomberg. U.S. state municipal debt lost 0.6 percent during the same period, Bank of America Merrill Lynch data show.