Chinese banks are increasing............>

CHINA PRESS: Chinese banks are increasing investment in local government bonds

as the central government recently issued favorable policies, 21st Century

Business Herald reported Friday. 

  - Fast decreases in bond yields of LGFVs, as well as the tax exemptions of

local government bonds, have both helped boost banks' investment in local

government bonds, especially after the Ministry of Finance required coupon rates

of local government bonds to be at least 40BP higher than CGB of the same term; 

  - However, recent rumours that the Chinese government may lower risk weighting

on local government bonds from 20% to 0% would be difficult to put into place,

the newspaper said, citing analysts and bankers that say such a measure would go

against global rules including BASEL III.