MOF Pushes for Foreign Banks to Underwrite Local Government Bonds
China’s Ministry of Finance (MOF) has signalled that it will expand the role played by foreign banks in the underwriting of local government bonds, as part of broader efforts to open up the Chinese finance sector.
MOF announced on 6 January that it was actively guiding local government financial departments in loosening the qualification requirements for wholly foreign banks, Sino-foreign joint-venture banks and the branches of foreign-invested banks to join underwriting syndicates for local government bonds.
Foreign-invested banks that have already participated in underwriting syndicates for local government bonds in China include:
- Taiwan’s Fubon Bank participating in the underwriting of local government bonds issued by Ningbo municipality and Chongqing municipality;
- Hong Kong’s Bank of East Asia (China) participating in the underwriting of local government bonds issued by Tianjin municipality and Guangdong province;
- Deutsche Bank (China) participating in the underwriting of local government bonds issued by Qingdao municipality.
MOF said that the participation of foreign-invested banks in underwriting syndicates for local government bonds would be of benefit to expanding channels for bond issuance and expediting the diversification of local government bond investors.
The authority said it would also expand the openness of the Chinese market for government bonds, drive internationalisation of the renminbi, and increase the international influence of China’s bond market.