China's LGFVs hit debt markets

Local government financing vehicles in China are raising many questions for bond investors. They will need answers soon — a big jump in supply looms large.

China’s local government financing vehicles, or LGFVs, were virtually unheard of among overseas investors four years ago. But they have rapidly become among the most prominent, and active, mainland issuers in the dollar bond market.

They raised $8bn in the dollar bond market last year, four times the amount they issued in 2014, according to Dealogic. Investors are hovering up their deals, attracted by implicit government support and strong ratings.

In the last week alone, Jinan West City Group joined the rush to the international bond markets, raising $300 million from its debut. That followed successful issues by Xi'an Municipal Infrastructure Construction Group,...

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