Shuli Ren, Columnist

The Time Bomb in China’s Bond Market

Off-budget local government debt may look attractive to investors, with juicy corporate bond yields and quasi-sovereign credit status. Be careful.

February 25, 2019 at 4:18 AM UTC

Corrected

February 25, 2019 at 11:53 AM UTC

By Shuli Ren

Shuli Ren is a Bloomberg Opinion columnist covering Asian markets. A former investment banker, she was a markets reporter for Barron’s. She is a CFA charterholder.

Troubles are piling up.
Photographer: VCG/Visual China Group

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Last August, when a paramilitary group almost became the first default among local government financing vehicles, few would have thought that another asset frenzy was afoot in China.

Yet off-budget local government debt is having a fun ride. After that scare, yields for AA rated, three-year bonds issued by local government financing vehicles compressed to 3.9 percent from about 5 percent.1