Investors Slash China Local Government Bond Tenors to Shortest On Record
- Bond tenors fall and coupons rise as investors cool on risks
- Poorer Chinese provinces experienced biggest funding crunch
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Investors in China’s local government financing vehicles are cutting the length of time they are prepared to extend credit and demanding higher returns, as cracks appear in the $9.1 trillion market.
In the first half of 2023 the average tenor — the length of time before a debt matures — of onshore LGFV bond issuance fell to 2.51 years according to Bloomberg calculations. That’s down from 2.95 years in 2022 and the shortest since at least 1999 when the data series began.