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China Allows LGFVs in Guizhou to Negotiate Debt Extension

  • State Council issues statement on Guizhou’s development
  • A bond of an LGFV in Zunyi city plunges to lowest in 7 weeks
A worker handles red lanterns in Danzhai, China’s Guizhou province, in September 2021. 

A worker handles red lanterns in Danzhai, China’s Guizhou province, in September 2021. 

Source: AFP/Getty Images

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China will allow government-owned borrowers in Guizhou province to negotiate with banks to extend debt repayments, stoking fears the local authorities may be struggling to meet debt obligations. 

“Financing platform companies will be permitted to negotiate with financial institutions to appropriately extend the maturity of existing hidden debt that meet certain requirements or restructure their borrowings to maintain cash flow,” according to a statement from the State Council on supporting Guizhou’s development.