BEIJING, Dec. 21 (Xinhua) -- China's Ministry of Finance (MOF) issued on December 17 a circular unveiling the administrative rules for local government bond (LGB) issuance, effective as of January 1, 2021, reported Xinhua Finance, a Xinhua-run financial information platform.
MOF said the rules were mapped out to streamline LGB issuance management and protect the legal rights and interest of investors, with the interim administrative rules for general local government bond and special-purpose LGB issuance to be invalid at the same time.
Under the new rules, Chinese local financial authorities are required to reasonably pin down the term structure of LGBs in accordance with the terms of related projects, financing costs, maturity timing, investor demand and concrete bond market situations.
For general LGBs, Chinese local financial authorities shall balance their term composition; and for special-purpose LBGs, their term shall be rationally decided and in line with the term of underlying projects.
For special-purpose LGBs whose term is not in line with the term of their underlying programs, consecutive issues are allowed within the term of a project. Special-purpose LGBs are also permitted to finance not only one project but a pool of multiple projects.
For LGB issuance, Chinese local financial authorities are required to select in the principle of openness and fairness and on basis of relevant laws, suitable and quality credit rating agencies from ones with qualifications for bond market rating in China and sign credit rating agreements with the credit rating institutions.
Apart from these, special-purpose LGB bonds issuers are required to publicize information about the underlying projects, project returns and financing balance plans, corresponding government funds or special revenue, appraisal opinions from professional third party institutions and others that may significantly influence investors' purchase decision. (Edited by Duan Jing with Xinhua Silk Road, duanjing@xinhua.org)
A single purchase
