the ministry of finance (mof) on thursday issued a notice on the issuance of local government bonds over the counter in the national interbank bond market. experts believe the move will help further expand local bond issuance channels and better meet the needs of individuals and small and medium-sized institutional investors.
according to the notice, local financial departments should give priority to bonds with local characteristics and high project yields based on the actual situation, and give priority to bonds with a maturity of less than five years (including five years). local financial departments should actively promote the counter issuance of local bonds. in principle, regions that have carried out counter issuance should arrange no less than two times in 2021 to ensure the continuous unimpeded issuance channels that have been established, and regions that have not carried out counter issuance should arrange at least one time.
positive results have been achieved in issuing local government bonds over the counter since the pilot program began in 2019. in august 2020, guangdong and zhejiang issued rmb 2.33 billion of local bonds over the counter of commercial banks, which was the first time for china to issue over the counter of commercial banks after the outbreak of the covid-19 epidemic. individual investors subscrited enthusiastically.
in 2020, local governments will issue 4.552.5 trillion yuan of new local government bonds, 96.2% of the total debt ceiling. of this, 950.6 billion yuan was spent on general bonds, 97% of which was completed. special bonds totaled 3.601.9 trillion yuan, 96.1% of the total.
source: ministry of finance, prc