Local Government Financing Vehicles (LGFV) in China
Local government financing vehicles play a key role in China’s public infrastructure projects, with their bonds becoming increasingly important in the offshore market. As such, we’ve expanded our LGFV coverage through dedicated ratings and research.
  • SUMMARY
  • REPORTS

  • RATING METHODOLOGY
    29 Jul 2020|Moody's Investors Service
    In this rating methodology, we explain our general approach to assessing credit risk for local government financing vehicles (LGFVs) in China, including the qualitative and quantitative factors that are likely to affect rating outcomes in this sector.

    SECTOR PROFILE
    31 Jul 2020|Moody's Investors Service
    We now assess 35 Chinese entities using our new local government financing vehicle (LGFV) methodology. We have affirmed the ratings of 28 of these LGFVs, upgraded six and downgraded one. We revised the outlooks for three LGFVs to stable from negative; all 35 rated LGFVs now have stable rating outlooks.
    RATING ACTION
    30 Jul 2020|Moody's Investors Service
    These actions reflect our classification of these entities as LGFVs under our new methodology, and our assessment of their respective regional and local government (RLG) owners' capacity to provide support and the LGFVs' specific characteristics affecting this support.

    SECTOR IN-DEPTH
    15 Jun 2020|Moody's Investors Service
    Onshore issuance remains strong, with increasing credit divergence; offshore issuance is still volatile. LGFV Bond Monitor Series >>

    SECTOR IN-DEPTH
    30 Jun 2020|Moody's Investors Service
    Zhejiang is an affluent and coastal province in eastern China. LGFVs in Zhejiang will continue to benefit from onshore credit-easing policies in next 12 months. LGFVs owned by prefecture-level cities in Zhejiang province have fairly strong funding capabilities, but credit risk still varies.
    SECTOR IN-DEPTH
    11 Jun 2020|Moody's Investors Service
    Coronavirus-related disruptions placed further strain on the finances of China's regional and local governments in the first quarter of 2020. The shock comes after RLGs recorded the lowest growth rate in general budgetary revenue in a decade last year. We expect this year's sharp slowdown in GDP growth to exert continued pressure on RLGs and to lead to a rise in their debt burdens over the short to medium term.

    DATA REPORT
    08 Jul 2020|Moody's Investors Service
    In May, Chinese regional and local governments began to slowly recover from the impact of the coronavirus and the associated tax and fee cuts. Infrastructure and property investment is recovering faster than other sectors. RLG revenue remains significantly lower than pre-shock trends would have implied, while spending needs are higher.

    KEY CONTACTS
    Ivan Chung
    Associate Managing Director
    ivan.chung@moodys.com
    Gene Fang
    Associate Managing Director
    gene.fang@moodys.com
    Gary Lau
    Managing Director
    gary.lau@moodys.com