Local Chinese state-owned enterprises SOEs can no longer assume that their debt will be guaranteed by their local governments, according to a new notice from the National Development and Reform Commission NDRC, the Chinese government body that oversees bonds. The notice also slapped restrictions on offshore bond issuance by local SOEs and local government financing vehicles LGFVs.
LGFVs and SOEs are both state-owned institutions in China, but LGFVs are usually directly controlled by local governments and perform financing functions on their behalf, while SOEs are more profit-driven and market-oriented.
For the first time, LGFVs are restricted...
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