Traders Are Worried About China Local Government Debt Again
- Demand for the bonds wanes on angst Beijing pulling support
- China saw the first LGFV credit rating downgrade this week
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The scent of doom is returning to China’s local government bond market.
S&P Global Ratings pulled the trigger on the first ever downgrade of a Chinese local-government financing vehicle Thursday, citing the city in eastern Jiangsu province’s high debt burden. Traders and analysts are uneasy as well, with 18 of 29 polled in a Bloomberg News survey saying they’d sooner buy corporate debt than LGFV bonds.