Management of local govt bonds issuance to be strengthened

Chinese 100 yuan banknotes are seen in a counting machine at a bank in Beijing, March 30, 2016. [Photo/Agencies]

China will strengthen the management of local government bonds issuance and make price-setting more market-oriented, China Securities Journal reported Wednesday.

Local financial government should take a scientific arrangement of bonds issuance based on the demand of capital, maturity status of inventory government debts or local government bonds and bonds market conditions, the Ministry of Finance said.

The annual and seasonal arrangement of bonds issuance by local government is encouraged to be released and same duration general and special bonds are allowed to be issued by the governments of the same province during the same period of time, the report said.

The amount of bonds publicly issued by local government in each season should account for less than 30 percent of the bond issuance scale for the whole year in general, said a notice on local government bonds issuing in 2018 by the ministry.

Local financial department cannot influence the price-setting of local government bonds by means of bidding guidance and interest rate agreement and for those who interfere in price-setting of local government bonds by non-market means will be publicly notified.

To optimize duration structure of local government bonds, 2-year, 15-year and 20-year durations for general bond have been added and 15-year and 20-year durations for special bond have been added, according to the notice.

China issued local government bonds worth 219.5 billion yuan ($34.41 billion) in the first quarter of this year and made bonds issuance the sole legal way local governments to raise debt amid the nation's efforts to forestall systemic financial crisis, the finance minister said.