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China Debt Squeeze Has Moody's Awaiting First Local Default

  • Deleveraging curbs have hit local financing vehicle borrowing
  • S&P, Lianhe flag chance of Beijing allowing LGFV default too
The Oriental Pearl Tower, center, stands at night in the Lujiazui district of Shanghai.

The Oriental Pearl Tower, center, stands at night in the Lujiazui district of Shanghai.

Photographer: Tomohiro Ohsumi/Bloomberg
Updated on

China may finally be ready to cut the cord when it comes to the country’s troubled local government financing vehicles.

Beijing’s deleveraging drive has seen rules impacting LGFV debt refinancing tightened, spurring a slump in issuance by the vehicles, which owe about 5.6 trillion yuan ($818 billion) to bondholders and are seen by some as the poster children for China’s post-financial crisis debt woes.