China local governments tap $29bn in special bonds to fund smaller banks

Issuances accelerate as smaller lenders face greater trouble generating profits

Shandong province has issued 25 billion yuan ($3.5 billion) in special bonds for replenishing the primary capital of four city commercial banks and 80 rural commercial banks, including 2.2 billion yuan to be injected into Dongying Bank.

XIA YINING and HAN WEI, Caixin

December 16, 2023 12:43 JST

Chinese local authorities have stepped up bond sales to assist small and midsize banks in supplementing capital to mitigate risks to the financial system as narrowing margins squeeze lenders.

Local governments of 16 provinces and regions had issued 19 special-purpose bonds designed to inject liquidity into banks as of Dec. 11, worth a total of 208.3 billion yuan ($29 billion), according to data from bond market database ChinaBond.