(ATF) China’s local government bond issuance grew by two thirds in the first five months of the year to fund a huge reconstruction plan for its coronavirus-hit economy.
Local governments issued almost 3.2 trillion yuan ($450 billion) worth of bonds through May, up 65% year-on-year, according to the Ministry of Finance (MOF).
In May alone, issuance reached a record of more than 1.3tn yuan, the MOF data showed.
Financing costs at the local level were reduced, with the average interest rate of bonds issued in the first five months falling 20 basis points from last year to 3.27%.
The average term of the bonds issued during the period was 15.2 years, 4.9 years longer than those of 2019. The longer maturity better meets the financing demands of long-term transport and water conservation projects, the MOF said.
Funds raised through new special local government bonds flowed to major infrastructure projects and public services, contributing to investment expansion and the promotion of economic and social development.
Amid a contraction of global trade and investment, China aims to spur domestic investment by planning the issuance of more special local government bonds, with priority given to technology infrastructure and new urbanisation initiatives.