The central Chinese province of Sichuan plans a copious bond issue to provide support to the capital standing of its local banking sector.
Sichuan province will issue 11.4 billion yuan (USD$1.76 billion) in special bonds, according to documentation made available by ChinaBond.com.cn (中国债券信息网) on 2 March.
The funds raised by the issue will be used to supplement the capital of 21 banks in Sichuan province via share conversion agreements deposits.
Analysts say the share conversion agreements differ little in character from ordinary bonds, as they both involve the stipulation of rates and maturities by both parties.
The 21 banks that will receive funds include four municipal commercial banks, 10 rural village credit cooperatives and seven rural village commercial banks.
As of the end of February 2021 a total of five Chinese provinces had issued 50.6 billion yuan in special bonds to supplement the capital of 29 small and medium-sized banks situated in their respective jurisdictions, including Guangdong, Shanxi, Zhejiang, Guangxi and Inner Mongolia.