Local Government Bond Issuance to Exceed 250 Billion Yuan in January

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Debt-raising at the local government level in China is off to a roaring start in 2019, with bond issuance expected to exceed 250 billion yuan in the opening month of the year.

A report from Securities Daily pegs puts local bond issuance in January at 250.469 billion yuan based on data made public as of 22 January.

A total of 13 provincial or municipal administrative entities in China are issuing bonds this month, including Sichuan province, Shenzhen, Jiangxi province and Yunnan province.

On 21 January Xinjiang launched 2019’s first local government bond issuance to raise 10 billion yuan in funds, while on 22 January Henan province successfully raised 45.324 billion yuan.

On 23 January Xinjiang is scheduled to issue 4 billion yuan in local government bonds, while on 24 January Fujian province hopes to raise 10.7 billion yuan via standard bonds, and Shandong province will raise 24.518 billion yuan in debt.

On 25 January Hebei province will issue 5.315 billion yuan in special bonds and Tianjin municipality will issue 29.7 billion yuan in local government bonds.

Yunnan province will issue 25.5 billion yuan in standard bonds on 28 January, 15 billion yuan in land reserve special bonds and 4.1 billion yuan in shanty town renewal special bonds.

On the same day Guizhou province is scheduled to issue 5.1 billion yuan, Hubei province is scheduled to issue 17.9625 billion yuan in standard bonds and 1.8 billion yuan in railway special bonds, while Qingdao municipality is set to issue 5.7 billion yuan in normal.

On 29 January Jiangxi province is scheduled to issue 21.74657 billion yuan in standard bonds and 2.6697 billion yuan in special bonds, while Sichuan will issue 10 billion yuan in standard bonds and 10.433 billion yuan in special bonds.

Shenzhen municipality is set to round out local government debt-raising in the first month of 2019 with the issuance of 900 million yuan in standard bonds on 30 January.

According to Liu Chenhan (刘辰涵), fixed income analyst at Northeast Securities, Chinese investors are showing strong enthusiasm for local government bonds due to higher yields on primary markets than on secondary markets, providing opportunity for profits at the time of re-sale.

Liu also points out that local government bonds have recently become more liquid on the Chinese market.

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