Readers will recall that there has been something a mystery in some components of the very steep slowdown in Chinese debt issuance over the last four months.
Most pointedly, local government borrowing, which accounts for a lot of infrastructure and property investment, cratered 80% year on year in the four months to April despite having quite generous quotas from Beijing. Now that strange downdraft may be easing:
- Leftover funds and the annual tax season saw less funds borrowed over April and May.
- Yields have been rising in the past week as local governments ramp up borrowing.
- Only 26% of local government quotas were filled in the first five months of the year. They are usually complete by October.
