China debt: Gansu province moves to restore investor confidence, double borrowing with no default vow
- ‘Technical default’ of a local government financing vehicle in 2021 had a ‘significant negative impact’ on Gansu province, according to a local financial official
- Corporate bond financing in Gansu declined to 22.3 billion yuan (US$3.2 billion) in 2022 from 57.6 billion yuan in 2019, according to Wang Zhiqiang
A province in China’s north west has moved to restore investor confidence as it bids to double its borrowing this year by vowing for the second time in just over a week that there will be no defaults on its debt.
The firm, which is engaged in urban redevelopment, utilities and bus services in Lanzhou, had missed the initial deadline to pay interest on a bond listed on the interbank market, but subsequently made the payment later in the day.
LGFVs were created to aid off-budget financing, especially for infrastructure spending, but disclosure requirements are often weak, leading to concerns of debt risk, although there has not been a full default of a listed LGFV bond in China.
Please be rest assured we will protect investors’ income and legal rights just like protecting our own lives and eyes
“In the past year and a half, Gansu has not defaulted on a single bond, and has not owed investors a penny!,” Wang told senior management of the Shanghai Stock Exchange during an investor road show, according to a copy of the speech published on the financial regulator’s site.