More Money For Muni Debt, About That 4 Trillion

In 2008, China launched a 4 trillion yuan stimulus to save the economy. In 2015, China is doing a 4 trillion debt swap to keep the economy from contracting.

Bloomberg: China Bonds Drop as Government Said to Expand Debt-Swap Program
The allocations will be raised to 4 trillion yuan ($628 billion) for this year, pending approval from the State Council, people familiar with the matter said on Wednesday. The program aims to help regional authorities by exchanging high-cost bonds for cheaper municipal debt.

“The biggest negative of the debt swap is the increase in bond supply that could trigger yields to go higher, especially in the mid- to long-end," Guotai Junan Securities Co. analysts led by Xu Hanfei wrote in a note. "We can’t rule out that the central bank will cut interest rates and reserve ratios to provide support."
Local governments are feeling the squeeze.

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