For the first time in almost three years, China’s net debt issuance by local government financing vehicles (LGFVs) became negative in May, reports Caixin.
A total of 184 LGFV bonds worth RMB 133.6 billion ($20.9 billion) were issued last month, a decrease of 47% from the same month last year and 80% less than in April, according to data from Wind Information.
Meanwhile, about RMB 241.6 billion of the LGFV bonds were set to be repaid in May, resulting in net financing for the month of minus RMB 108 billion, the first negative reading for LGFV borrowing since September 2018.
The plunge in new LGFV debt issuance and rising use of new debt to repay old debt reflect a series of tightening policies from regulators, several market participants said. LGFVs are special purpose vehicles set up by local authorities to borrow money for funding infrastructure and public welfare spending.