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Caixin

China's Moutai comes to home province's rescue with bond purchase

Deal shows how a local government can leverage a profitable state-owned business

The parent of the Chinese mainland's most valuable listed company, liquor-maker Kweichou Moutai Co. Ltd., plans to issue up to 15 billion yuan ($2.2 billion) in bonds to help another local government-owned company in debt-ridden Guizhou province repay its debts.

The bond issuance illustrates how a local government can leverage a profitable state-owned enterprise (SOE) to aid a peer and, by extension, the government itself, which is in theory responsible for the debts of the companies it owns.

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