(Yicai) March 29 -- China’s issuance of local government debt slumped 23 percent in January and February from the same period last year, after an additional CNY1 trillion (USD138.4 billion) of treasuries were sold at the end of last year, boosting local government coffers.

Around CNY944.4 billion (USD130.7 billion) of local government bonds were issued in January and February, according to data from the Ministry of Finance. Of this, newly issued debt, which is mainly used for the construction of major infrastructure projects, plunged 46 percent year on year to CNY575.9 billion (USD79.7 billion), while that of refinancing bonds, which are used to repay maturing debt, soared almost two-and-a-half-fold to CNY368.5 billion.

It is not surprising that the issuance of newly added local government bonds slowed in January and February as an additional CNY1 trillion in treasury bonds was released at the end of last year, extending the queue of financing projects to be reviewed, experts said.

The slowing new bond issuance did not affect investment in infrastructure projects in January and February, the ministry said. Spending on urban and rural communities surged 19.6 percent year-on-year, and expenditure on agriculture, forestry and water projects soared 24.9 percent.

And the jump in the issuance of refinancing bonds is mainly due to the large number of local government bonds, around CNY3 trillion (USD415.2 billion), that is due to mature this year, the experts said. Some CNY272.5 billion needed to be repaid in the first two months, CNY208.1 billion of which was raised by issuing refinancing bonds.

This year’s quota for local government bond sales has been set at CNY4.6 trillion (USD636.8 billion), a slight increase over last year. The rolling out of bonds over the course of the year may accelerate, so as to give full play to the role of debt financing in stabilizing investment, promoting consumption and steadying the economy.

In the first two months, local government bonds accrued CNY178.2 billion (USD24.6 billion) in interest, a jump of 24 percent from the year before, according to the ministry. At present, the risk of local government debt is generally controllable.

Editor: Kim Taylor