Local Government Bond Issuance Hits Single Day High at End of January

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China has seen single day issuance of local government bonds hit a record high on the final day of January.

According to a report from Securities Daily 138.995 billion yuan in local government bonds were issued by eight regional authorities on 31 January for a single day record.

These eight local governments included Guangdong province, Zhejiang province, Hainan province, Jiangsu province, Shenzhen municipality, Inner Mongolia, Guangxi and Beijing.

The Guangdong province government issued 35 billion yuan in 2019 Guangdong Province Local Government Bonds via auction on the Shenzhen Stock Exchange, while the Zhejiang province government issued 46.3 billion yuan in local government bonds.

Shenzhen issued 900 million yuan in normal bonds, Inner Mongolia 10 billion yuan in normal bonds, Guangxi 5.8 billion yuan in normal bonds, Beijing 13.395 billion yuan, Hainan 8.1 billion yuan and Jiangsu province 19.5 billion yuan.

A total of 417.97 billion yuan in local government bonds were issued in China in January, including 368.76 billion new bonds and 49.2 billion yuan in rollover bonds.

Liu Yu (刘郁), chief fixed income analyst at Guosheng Securities, said that local government bond supply saw comparatively heavy pressure towards the end of January without any pronounced shocks.

The Chinese central bank’s required reserve ratio cut as well as financial inclusion measures and the launch of targeted medium-term lending facilities (TMLF) served to release ample liquidity and effectively offset local government bond supply pressure.

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