A new analysis by Standard and Poor’s found about half of China’s local governments may warrant junk-level credit ratings, The Financial Times reported. The analysis found 15 of the 31 localities surveyed to be worthy of junk status and raised concerns over whether many less wealthy provinces and cities will be able to transition to bond issuance. The finance ministry in May launched a pilot program allowing 12 local governments to sell bonds directly, but these findings cast doubt about the program’s ability to expand further. Northeast China fared the worst in the analysis, followed by central China and western China.
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