China's high local and regional governments (LRGs) debt has worried many external observers in recent years. In a 2011 report, the National Audit Office (NAO) stated that Chinese renminbi (RMB) 4.5 trillion of LRG debt would mature over 2011-2012. This included debt incurred through LRG-related companies known as financing platforms (LGFPs). Yet these two years saw no disruptive credit event related to LRGs and LGFPs despite weaker LRG revenue collection last year. Standard & Poor's Ratings Services attributes this largely to the willingness of many creditors to finance LRGs/LGFPs even when they have already incurred sizable debt. Creditors appear to be confident that the central government would use its strong financial strength to support LRGs/LGFPs that suffer financial distress. Consequently,...
Companies mentioned in this report are:
- China (People's Republic of )
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