IFR Asia LGFV Funding Roundtable 2016: Back in fashion

The finances of China’s local governments are once again capturing the attention of capital markets participants, but for very different reasons. Just a few years ago, local government debt was seen as a risk to China’s financial stability, with analysts raising the alarm over previously undisclosed obligations totalling trillions of renminbi. Far from bringing down the system, however, bonds from local government financing vehicles have today become popular investments, gaining a strong following both onshore and offshore. Already LGFVs make...Read more

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IFR Asia LGFV Funding Roundtable 2016: Roundtable participants

IFR Asia LGFV Funding Roundtable 2016: Roundtable participants    Keith Chan HSBC Keith Chan is a director and corporate credit analyst at HSBC, with a focus on international bonds from property companies and conglomerates in Greater China, Indonesia and the Philippines. He also covers Chinese internet and IT companies, and recently has extended his coverage to China local government financing vehicles (LGFVs). Chan joined HSBC in 2005 and has covered Asian corporate credits in a variety of sectors, including quasi-sovereigns and utilities....

IFR Asia LGFV Funding Roundtable 2016: Part 1

IFR ASIA: Welcome to the discussion on China’s local government financing vehicles. Let’s start with a definition: what is an LGFV, and why are they relevant for the capital markets? IVAN CHUNG, MOODY’S: It’s a very good question, what is the definition of an LGFV? There is no consensus among the market participants or even among regulators in China. To our understanding, it’s a policy entity. They’re doing public works for the government, and the government is supposed to pay for these projects. The key issue here, particularly before the...

IFR Asia LGFV Funding Roundtable 2016: Part 2

IFR ASIA: Ivan, how do you account for all of this when you’re looking at a rating? IVAN CHUNG, MOODY’S: Whatever happens our analysis focuses on the issuer’s ability and willingness to meet their debt obligations. Many LGFVs are linked to the government. Having said that, we need to do more analysis on the local government’s ability to provide support. Under the Chinese structure, the local government get 30% of tax revenues and the central government gets 70%, but the local government still covers 70% of expenditure. That means the local...

Roundtable

Roundtable

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