China is turning to tailor-made local government debt to fund infrastructure projects and support the economy, but investors tempted by such bonds should be wary of putting their money to work in overly crowded sectors.
Local governments have to meet an issuing quota set by central government for these special-purpose bonds each year. Although directly sourced figures are hard to come by, Fitch Ratings and Chinese media reports indicate that this quota has risen to Rmb1.35 trillion $196 billion this year from just Rmb100 billion in 2015 and Rmb800 billion last year.
Trouble is, only Rmb150 billion of new special-purpose bonds...
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