Debt-swap quota for local governments doubled to RMB1tn

Financial regulators have confirmed the doubling of an RMB1 trillion (US$161 billion) quota to local governments to swap high-interest debt for lower-cost bonds, Bloomberg reported, citing a statement from the Ministry of Finance. Chinese banks are being told to buy the new, longer-maturity, lower-yield bonds to alleviate a funding crunch among provinces in order to avert further economic slowdown. The increase should help local governments cut further growth to their already mountainous debt, accrued though off-balance sheet financing vehicles during a record surge in borrowing in the years following the outbreak of the global financial crisis.