China needs to issue municipal bonds to correct an asset/liability mismatch that is threatening to create more liquidity problems in Chinese debt markets, according to several sources in the country. In a report, China Inside Out – Local debt: Three options, Qu Hongbin, chief economist for greater China at HSBC, says that the "mismatch between the maturity structure of bank borrowings and the payback period of long-term infrastructure projects" poses a liquidity risk that needs to be addressed via a restructuring.
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"Remember that ‘repaying’ debt means servicing interest payments in a condition of repressed interest rates"
Michael Pettis, Guanghua School of Management |
Much of the debate on the level of non-performing loans (NPLs) on China’s local government balance sheets has focused on the...
