Local governments allowed to convert some debt to low-yield bonds

The Ministry of Finance will allow regional authorities to convert up to one trillion RMB of debt into low-yield government bonds in order to reduce heavy debt at the local level and lessen interest payments by 40-50 trillion RMB annually, South China Morning Post reported, citing an announcement from a ministry spokesperson. The ministry hopes to ease the continued debt problems faced by regional governments due to slower fiscal growth and enhanced scrutiny over risk and tighter bank lending coupled with the continued need to stabilize local economies through infrastructure projects.