A state-owned firm in China’s Guizhou province is selling bonds to help repay debt issued by a local government financing vehicle (LGFV), a rare move that highlights the region’s liquidity strains, reports Caixin. Guizhou Hongyingda Construction Project Management Co., a wholly owned subsidiary of the finance bureau of Xixiu district in Anshun city, issued a RMB 1.8 billion ($250 million) five-year non-public bond Friday with a coupon of 4.8%, according to a filing on Shanghai Stock Exchange’s private disclosure platform seen by Bloomberg.
The security was rated AAA by domestic ratings agency CSCI Pengyuan Credit Rating Co. as it is guaranteed by Guizhou State Owned Asset Operation Co. Ltd., a wholly owned unit of the province’s finance bureau.
The proceeds of the private note will go toward repaying or refunding two bonds sold by Anshun Xixiu Qiancheng Investment Development Co. Ltd., an LGFV in the region. Although based in the same district, Guizhou Hongyingda has no direct equity relationship with Xixiu Qiancheng Investment.