China City Builders Buck Property Slump to Win Record Low Yields
- Local government financing vehicle bond coupons lowest ever
- LGFVs still face risks, but none has defaulted on dollar bond
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A key part of China’s credit market is doing better than ever, even as riskier developers get hammered by a slowdown in the sector.
Local government financing vehicles -- which finance roads, bridges, subways and even some property development -- have won average coupons of 2.5% on newly issued dollar bonds so far in October. If sustained, that would be the lowest on record for any quarter ever. In contrast, developers are paying an average of about 10%.