China’s local government financing vehicles (LGFVs) are finding it a lot harder to issue bonds, as authorities step up efforts to curb risks from the debt-laden sector in a slowing economy, reports Caixin. Regulators terminated applications for 53 new LGFV bonds with a combined RMB 75.2 billion ($10.4 billion) in the first two months of the year, the highest for the same period since 2021 when S&P Global Ratings began compiling the data. That compares with 11 vetoed deals worth RMB 17.2 billion a year ago.
The regulators reviewing LGFVs’ bond plans include the Shanghai and Shenzhen stock exchanges, as well as the National Association of Financial Market Institutional Investors, China’s interbank market watchdog.
The trend started in July after Beijing prioritized addressing financial risks including surging local government debt, before reaching a peak in the fourth quarter. The month-on-month momentum eased in February when China was shut for a week-long public holiday.