MNI POLICY:Record China Local Gov Bond Sales In Stimulus Drive

     BEIJING(MNI) - Chinese local government bond issuance hit a record high in

the first quarter as authorities accelerated borrowing to boost the economy,

Ministry of Finance spokespeople told reporters Tuesday in a briefing.

     Here are main points from the briefing:

     --In the first quarter, newly-issued local government bonds totalled

CNY1.18 trillion, significantly more than the CNY219 billion in the same period

last year. Issuance has been largely frontloaded by four to five months this

year, said Hao Lei, vice director of the budget department. The Ministry

required local governments to accelerate sales to meet the approved debt quota

for the year, which totals CNY3.08 trillion.

     --The cost of local government financing largely fell in Q1, with an

average rate of 3.34% for new LGB, 55 basis points lower than in 2018 Q1.

Issuance of bonds with 10-year duration and above was CNY419.8 billion, Hao

said, adding they were mainly used for supporting ongoing projects.

     --Tax revenue continued to grow at a slower pace following cuts in levies.

Tax income increased 5.4% on an annual basis in Q1, falling 11.9 percentage

points compared with the same period last year, as cuts in value-added tax,

individual income tax and taxes on small and micro businesses took effect,

according to the ministry.

     --Cuts in taxes and fees will pressure fiscal revenue growth at both

central and local government levels, the ministry said. The central government

has reduced general spending by over 5% and some local governments have exceeded

this level of reduction. The central government will boost transfer payments to

local administrations by 9% to CNY7.54 trillion this year, the largest growth on

record, the ministry said.

--MNI London Bureau; +44 203 865 3829; email: jason.webb@marketnews.com

[TOPICS: M$A$$$,M$Q$$$,MT$$$$,M$$FI$,MGQ$$$]