China Tells Banks to Extend Local Government Loans Amid Crunch
- Regulators issue directives to cover debts this year and next
- China’s local governments struggle under $9 trillion in debt
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China’s financial regulators told its policy banks and biggest lenders to issue new loans to cover offshore debt issued by local governments maturing this year and in 2024, ramping up efforts to ease a credit crunch for highly indebted municipalities.
After earlier urging banks to roll over debt and extend maturities, regulators, including the National Administration of Financial Regulation, recently issued clearer directives to extend local government debt at lower interest rates, people familiar with the matter said, asking not to be named discussing an internal order. It also stipulated that local governments would repay a certain amount of the principal annually.