Shanghai on Tuesday sold RMB 7.1 billion worth of regional government bonds in China’s first sale of such financial products, local media reported.

The 7.1 billion worth bonds will be divided into 2 tranches: RMB 3.6 billion of 3-year bills in Phase I and RMB 3.5 billion of 5-year notes in Phase II. RMB 1.08 billion of Phase I sales will be underwritten by the local government.

China Development Bank, Bank of Communications Co. Ltd. (601326.SH, 3328.HK), and Bank of Shanghai Co. Ltd. were appointed lead underwriters by the Ministry of Finance. The other 17 underwriters include Guotai Junan Securities Co. Ltd. and Shanghai Pudong Development Bank Co. Ltd. (600000.SH).

Media reports said the local government had slashed the rates on the bonds, which could reduce Shanghai’s borrowing costs.

China is experimenting with trial local government bond sales in Shanghai, Shenzhen, Zhejiang and Guangdong as it looks to relieve the debt mountain built up by local government borrowing in recent years.

Source:21cbh.com