LGFVs Keen To Issue High-Interest, Short-term Overseas Bonds

Local government financing vehicles' appetite for high-interest, short-term offshore debt issuance could attract the attention of regulatory authorities in future as the deals sidestep rules that aim to limit local debt and lower costs for local governments, Yicai.com reported citing Wang Lei, head of industrial and commercial enterprise rating at S&P Global Ratings. LGFVs are keen to issue foreign bonds maturing in 364 days to escape the regulatory scope, which only targets one-year foreign debt instruments. A total of 234 LGFV bonds were issued overseas throughout 2023, raising USD25.37 billion, of which more than two-thirds have maturities of less than one year. The average financing interest rate of these short-term bonds is 6.5%.