China lets local governments swap debt into municipal bonds
This is to reduce interest payments by as much as 50 billion yuan a year, allowing authorities to boost spending
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Beijing
CHINA will allow regional authorities to convert some high-yielding debt into municipal bonds in a bid to cut financing costs on liabilities that brokerages say have topped US$3 trillion, sparking speculation investors may shoulder losses.
The government will permit as much as one trillion yuan (S$220 billion) of the obligations to be swapped into local-government notes that have lower yields, the finance ministry said in a statement on its website dated March 8. That may reduce interest payments by as much as 50 billion yuan a year, allowing authorities to boost spending, it said. The statement didn't specify what kind of debts and creditors are involved.
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