Local governments in China have more than doubled bond sales to roll over maturing debt this year, helping to ease their repayment risk, reported Bloomberg.
Cities and provinces sold about RMB 1.9 trillion ($293 billion) of refinancing bonds in the first six months of the year, according to data from the Ministry of Finance and compiled by Bloomberg News. That’s a sharp increase from about RMB 700 billion sold in the same period of 2020, and RMB 660 billion in 2019.
The refinancing bonds are sold to replace maturing securities, reducing pressure on local authorities to pay back the debt.
“The amount of debt due will keep growing, so the scale of refinancing isn’t likely to fall,” said Ding Shuang, chief economist for Greater China and North Asia at Standard Chartered Plc in Hong Kong. “That’s the case unless policy makers seriously look to reduce the absolute value of the debt, which is unlikely.”