China’s Local Government Bond Rush Worsens Liquidity Strain
- Regions to sell 850 billion yuan of bonds to refinance debt
- Surge in issuance comes as money market rates have risen
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China’s local governments are rushing to issue bonds to refinance hidden debt, further tightening liquidity in the financial system.
Regional authorities are set to sell 1.69 trillion yuan ($233 billion) of bonds in the first two months of 2025, an unprecedented amount for the period, data compiled by Bloomberg show. About half of the issuance, or 850 billion yuan, is to replace off-balance sheet debt, according to the data.