PBOC Faces Record Corporate, LGFV Refinancing Pressure

China’s interbank markets will face record volumes of maturing corporate bonds in March and April, with a large proportion from local government financing vehicles. The heavy refinancing pressure occurs amidst slower credit growth anticipated throughout 2021. Local governments have already refinanced large volumes of debt this year, but more SOEs are reporting new defaults in January and February, particularly among state-owned coal miners. The PBOC’s actions will be carefully watched as refinancing pressure builds, with the central bank likely to turn more accommodative to prevent additional financial stress from materializing.

Posted March 15, 2021
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