China’s Long Bonds Decline as Local-Government Debt Swap Doubles
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China’s long-term sovereign bonds declined, pushing the 10-year yield to a one-week high, after the government confirmed the doubling of a debt-swap plan that is spurring issuance of municipal notes.
The Ministry of Finance granted a further 1 trillion yuan ($161 billion) of quota for local governments to convert high-cost borrowings to bonds, it said Wednesday in a statement. Bloomberg reported the move a week ago, citing people familiar with the matter. The increase boosts the total debt-swap program to 2 trillion yuan and issuance so far has comprised securities with tenors ranging from three years to a decade.