Local gov'ts to continue bond issuance trials

BEIJING - The Ministry of Finance (MOF) announced Monday that the State Council, the country's cabinet, has given approval to the cities of Shanghai and Shenzhen, as well as the provinces of Zhejiang and Guangdong, to continue bond issuance trials this year.

The MOF said that it would still act as an agent to pay off the principal and interest for the bonds.

The bond issuance quota should not exceed the amount allowed by the central government, the MOF said, adding that quotas will not be allowed to "roll over" to the following year.

The bonds issued as part of the trials are book-entry bonds with fixed interest. Maturity types include three-year, five-year and seven-year. The issuance of any given bond category cannot exceed 50 percent of the local government's total bond issuance portfolio, the MOF said.

Shanghai started issuing China's first-ever local government bonds last November as part of a pilot project aimed at curbing debt risks for cash-strapped local governments.

Before the move, China banned local governments from selling bonds directly, although the MOF has previously issued around 200 billion yuan ($31.64 billion)?in bonds on behalf of local governments each year.