Hope You Like Getting Paid in Depreciated Yuan

No moral hazard here. Local governments financial vehicles, which can pass the buck onto the local government, who passes in on to the central government, and finally the central bank, are borrowing at high yield in appreciating U.S. dollars. They local governments are broke, can't access credit, or funding their spending with a land bubble.

Reuters: China's local government bond risks flow to yield-hungry foreign buyers
Local Government Financial Vehicles (LGFVs), created by China's local authorities to bypass restrictions on their borrowing, have so far this year issued $3.4 billion of high-yielding dollar-denominated bonds, within reach of the $4 billion record for the whole of 2015.

...Beijing Infrastructure Investment and Guangzhou Metro Group, two LGFVs that manage urban transport systems, were able to sell global bonds even though at the current pace of cash generation it would take them 324 and 750 years, respectively, to repay their debt, according to DBS Group Research.

...Tianjin Binhai, which develops infrastructure in the Binhai new Area, would have been rated eight notches lower than its A3 rating from Moody's without the very high level of support from the Tianjin Government, according to Moody's, which said in March the vehicle had a "weak standalone profile with little commercial viability".

When it launched its $500 million, five-year bond in 2015, Tianjin Binhai received orders for over $1.9 billion as investors were attracted by its pricing at 245 basis points over corresponding U.S. Treasuries.

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