China local government financing vehicles in focus

Why are local government financing vehicles LGFVs increasingly looking offshore to raise funds
The offshore bond market provides LGFVs with a deeper pool of liquidity and efficient means to raise funds. For example, Beijing Infrastructure Investment launched a medium-term notes program in 2014 to facilitate overseas fund-raising, and lifted the program size to $6 billion from an initial $2 billion in June 2015.

Domestic fund-raising has become increasingly restrictive for LGFVs. Under regulations introduced in October 2014, the vehicles have been unable to raise funds on behalf of their local governments at the same time that conditions have tightened for LGFV-related bond issues. The...