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China to sell 35.8b yuan local govt bonds

By Hu Yang (chinadaily.com.cn)
Updated: 2010-09-01 17:40

China's Ministry of Finance will sell two batches of local government bonds worth of 35.8 billion yuan ($5.25 bilion) on behalf of twelve provinces, municipalities and autonomous regions, starting next Monday, the Oriental Morning Post reported.

The sales are the seventh and eighth local government bond sales this year. The seventh batch includes 20.6 billion yuan of three-year bonds and the eighth has 15.2 billion yuan of five-year bonds.

More stories:  China starts selling $2.87b of 3-yr local govt bonds  China to sell $6.41b of local govt bonds on June 18  Govt bonds decline on inflation report jitters  Long-term govt bonds a 'bad bet'

China has sold 169.3 billion yuan of local government debt so far this year, accounting for 85 percent of the 200-billion-yuan plan for 2010.

August alone witnessed the issuance of 66.5 billion yuan of such bonds, a record high since the issue worth 59.4 billion yuan in April, 2009.

Some thought the large amount of local government bonds are intended to offset the influence of the clean-up of local government-backed financing vehicles. But Hu Yijian, professor at the Shanghai University of Finance and Economics, said the amount of local government bonds is pre-determined and has no direct relation with local financing vehicles.

The country began issuing local government bonds last year to help finance its 4-trillion-yuan stimulus package.