Xi's deleveraging zeal hits China local govt funding plans

At least a dozen local government financing vehicles, or LGFVs, have hit the brakes on their offshore debt sales as investors fret about the rising default risks.

It's practically a year since President Xi Jingping launched China's deleveraging campaign and the ripple effects are being felt in overseas primary bond markets, with Chinese local-government financial vehicles LGFVs in particular reining in their debt-funding plans.

At least a dozen, including Shenzhen Guangshen and Shandong Gaochuang -- the investment vehicles for the authorities in the city of Shenzhen and Shandong province, respectively -- have put their planned dollar debt sales on hold after recently meeting investors in Hong Kong and Singapore, two China-focused debt bankers told FinanceAsia.

“Foreign investors see rising default risk in the LGFV sector,” one of them...

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