The first local government bonds without central government backing are a positive step but still do not allow enough room for market forces.
Until now four provinces have issued government bonds in their own name but credit analysts have noticed that the central government hasn’t stepped away from the pricing process.
In May, China’s Ministry of Finance for the first time allowed 10 local governments to tap the bond market under their own steam for around Rmb120 billion $19.7 billion. The 10 are Shanghai, Zhejiang, Guangdong, Shenzhen, Jiangsu, Shandong, Beijing, Jiangxi, Ningxia and Qingdao.
Previous issuance from the local...