S&P warns of inherent risks in local govt bonds

Half of China's local governments could warrant junk-level credit ratings, according to ratings agency Standard & Poor's Financial Services LLC, in stark contrast to the view of domestic ratings agencies.

While refusing to specify which provinces exactly might be considered as "junk", S&P said in a report that three provinces in Northeast China had what it called "speculative-grade credit features".

Wide differences exist between China's well-off eastern provinces and the less prosperous inland regions.