https://www.smh.com.au/business/the-eco ... 5d0xi.html
Borrowings from local government financing vehicles. For years, municipalities have been relying on these off-balance-sheet entities to fund infrastructure and support the local economy. LGFV debt rose to 57 trillion yuan ($12.4 trillion) in 2022, or 48 per cent of China’s gross domestic product, according to estimates from the International Monetary Fund.
It is fiscal maneuvering on an epic scale. LGFV borrowings are almost the same size as official central and local government debt combined. Bank loans aside, these vehicles routinely raise money from corporate bond issues, accounting for over 40 per cent of the total market. Their outstanding amount reached about 36 trillion yuan last year.
Investors are nervous. LGFVs’ ability to service their debt is worse than developers’, in that their mandate is non-profit and to provide public services. The average return on assets among LGFV bonds was only 0.4 per cent in the first half of 2022, according to data compiled from Gavekal Dragonomics. Meanwhile, these 1,800 issuers are not compensating buyers for the risks they take, paying on average only 4.3 per cent interest.
full story at link
China local gov debt exceeds 48% of GDP
- chkai chgout
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- I live above an internet cafe
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0.4% ROI even the UK banks can beat that nowadays!
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