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Reuters

Jiangsu province may delay a planned debt auction scheduled for Thursday, three sources said yesterday, signalling a possible rocky start for mainland China's fledgling municipal bond market this year.
The 64.8 billion yuan (HK$81 billion) auction, if it proceeds as planned, would be the first such official issue by a local government since the Ministry of Finance announced a landmark debt swap programme for heavily indebted local governments last month.
Three bond market participants with direct knowledge of the auction said they understood the auction would be postponed.
An official at Jiangsu's provincial finance office said it was giving consideration to delaying the auction.
None of the sources gave reasons for the potential delay.
The bond auction announcement on the Jiangsu provincial government website, originally posted on April 16, was unavailable yesterday afternoon, suggesting it had been taken down, and an expected notice on the website of China's bond clearinghouse has not yet been posted.
Calls to the bond market operators, including the Shanghai Clearing House and National Association of Financial Market Institutional Investors, went unanswered.
Jiangsu is one of the mainland's most heavily indebted provinces, with a debt load approaching 1.6 trillion yuan as of 2013, ratings firm Moody's said.
On March 8, the Ministry of Finance announced that local governments would be allowed to swap up to one trillion yuan of high interest, maturing debt for official lower interest provincial or municipal debt.
Jiangsu's bond sale announcement did not specify whether this 64.8 billion yuan tranche constituted a portion of the one trillion yuan swap or would fall under the regular 600 billion yuan quota for regional and local government debt already approved in the general 2015 budget.
Nevertheless, in the context of the large new supply of anticipated local government issues this year, the market has been watching closely to see how the Jiangsu debt auction would proceed.
Beijing is encouraging municipal authorities to sell bonds directly, rather than via local-government financing vehicles, to increase transparency in funding construction projects and reduce risks from off-balance-sheet debt.
The strategy has been described by central authorities as "opening the front door and closing the back door".


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Business

China Business

Postponement signals rocky start to landmark local government debt swap programme


Jiangsu province may delay a planned debt auction scheduled for Thursday, three sources said yesterday, signalling a possible rocky start for mainland China's fledgling municipal bond market this year.


Jiangsu may delay 64.8b yuan planned debt auction

.css-1c6uqr6{color:inherit;font-weight:inherit;font-size:inherit;font-family:inherit;line-height:inherit;overflow-wrap:break-word;}Postponement signals rocky start to landmark local government debt swap programme

Postponement signals rocky start to landmark local government debt swap programme