[SINGAPORE] China plans to expand its regional and local government (RLG) bond market pilot scheme at a faster pace than analysts had expected.
Minister of Finance Lou Jiwei said that the Rmb109.2bn (US$17.6bn) pilot programme would be extended beyond the initial eight provincial and two city-level governments and that participants would be allowed to issue special-purpose bonds in addition to general-obligation bonds, said Moody's Investors Service, citing reports from China's state-run media and an official filing.
Moody's said the latest development was credit positive for Chinese RLGs, as they would need to demonstrate increased transparency and accountability in order to access the bond market. "Moody's believes that this will in turn enforce strong local decision-making and responsible public policy," Moody's wrote in a note.
"Nevertheless, the pace of development is quicker than the market had expected and there is still a lack of detail on how this development will fit within the central government's plan for RLG debt reform." Ningxia Hui Autonomous Region announced plans last month to become the first regional government issuer in China to access the offshore bond market, with a deal size of up to US$1.5 billion and tenor of up to five years. This could include a US dollar issue or sukuk, it said.