Chinese regulators are hitting the brakes on a record surge in US dollar bond sales by local government financing companies despite unprecedented demand for the debt, said the Financial Times.
Local government financing vehicles (LGFV), which have been used for years by Chinese cities and provinces to raise funds for local infrastructure projects, sold $12.4 billion in US dollar bonds in the first half of the year, according to Dealogic, nearly doubling issuance from the same period last year.
The boom in debt deals, however, is expected to come to an abrupt end on Friday, after which Chinese regulators are prepared to impose stricter rules on the companies.
The National Development and Reform Commission said in mid-June that it would only allow LGFVs to refinance existing debt in the second half of the year, as Beijing grows wary of building offshore repayment pressures.