Advertisement
China’s LGFV bonds to top offshore dollar debt issuers in 2022 as market grows tired of defaults and delayed payments by developers
- Local government financing vehicles (LGFVs) are expected to remain China’s largest issuers of dollar debt offshore this year
- LGFV issuance soared 184 per cent as of the end of April from a year earlier, according to Pengyuan International
Reading Time:3 minutes
Why you can trust SCMP
1
China’s local government financing vehicles (LGFVs) will remain one of the largest groups of offshore bond issuers this year, as they increased their fundraising amid the market’s general loss of appetite for real estate developers.
Advertisement
LGFVs are likely to remain the top sellers of offshore debt after their US$28 billion issuance propelled them to the top last year, according to Moody’s Investors Services. LGFVs made up a quarter of China’s 2021 corporate debt fundraising, Moody’s said.
The debt sold by these local government fundraising vehicles – semi-municipal bonds – has filled in the vacuum of high-yielding debt sold by property developers, as a sluggish real estate market and a record bout of defaults and missed payments deterred many global investors. LGFV issuance soared 184 per cent as of the end of April from a year earlier, according to Pengyuan International.
Advertisement
“Some LGFVs at lower administrative levels have been diversifying their funding channels via offshore markets due to tightened regulations on the use of proceeds from new onshore issuance,” said Zhang Shuncheng, an associate director at Fitch Ratings.
Advertisement