Spray and Pray Faster: 1 Trillion Yuan Infrastructure Bonds in August

SCMP: China’s finance ministry goes back to old playbook with move to spur bond sales

The move also indicates a return to Beijing’s old playbook of relying on debt-fuelled state investment to keep economic growth on track at a time when the leadership is worried about dangers beyond its control, though it has refrained from an all-out stimulus strategy, analysts said.

The Ministry of Finance issued the order on Tuesday, after Beijing decided to prioritise maintaining growth over cutting debt due to headwinds from a trade war with Washington and decelerating investment at home.

The cabinet had already said it would allow local governments to issue 1.35 trillion yuan (US$195.12 billion) of “special purpose” bonds for infrastructure investments. But the finance ministry took it a step further, telling local governments to sell at least 80 per cent of those newly approved special purpose bonds before the end of September. Most local government bonds are sold to the country’s financial institutions and a surge in their supply will in turn put pressure on the People’s Bank of China to loosen its monetary policy.

...Local governments have been quick to take advantage of the new opportunity to raise funds.

In Guangdong, the provincial authorities released three bond sale prospectuses on Tuesday, aiming to raise a total of 44 billion yuan for urban development, affordable housing and water treatment projects in the Pearl River Delta region. The bond issues were described as “extremely urgent” by the Guangdong government in the official documents.

Local government bond sales could raise more than 1 trillion yuan this month, official newspaper the China Securities Journal reported.

A couple of days ago it was supposed to take 4 months. Spray and Pray: Work Round the Clock to Issue Local Govt Debt, 1 Trillion in 4 Months