Total local government bond issuance in China is expected to reach around 4.3 trillion yuan for full year 2018 following sharp decline in volumes since tapping a peak in August.
Local government bond issuance has eased markedly since the start of the month with only two issues planned as of 17 December, being the 2018 Xiong’an New District Construction Standard Bond and the 2018 Xiong’an New District Construction Special Bond scheduled for 19 December and a total sum of 30 billion yuan.
A report from Time Weekly points out that data from the China Government Securities Depository Trust & Claring Co., Ltd. outlines low local government bond issuance at the start of 2018 followed by an acceleration in the second quarter before reaching a peak in August.
By July local government bond issuance had risen to 756.954 billion yuan, tapping a peak of 882.97 billion yuan in August, before declining to 748.546 billion yuan in September.
October saw an abrupt decline to 256.031 billion yuan, before falling even further to 45.94133 billion yuan in November.
Zhao Xijun (赵锡军), vice-head of Renmin University’s School of Economics and Finance, said to Time Weekly that there was some chance of increased local government bond issuance next year.
“Next year the scope of local government bond issuance could eland slightly, but the key will be determined by growth of the economy and investment next year,” said Zhao.
“If private investment eases, local government will bear an even more important responsibility.”
The official website for National People’s Congress has also revealed that a meeting held on 14 December recommended the release of proposals for new local government debt quotas at the end of the month in advance of schedules.