China Policy Banks To Issue RMB 1.0 Tril In Bonds In Next 3 Years: BofAML – ValueWalk Premium
China Infrastructure FAI to facilitate growth

China Policy Banks To Issue RMB 1.0 Tril In Bonds In Next 3 Years: BofAML

China has authorized its policy banks to issue at least RMB 1.0 trillion (or ~$160B USD) of long-term special financial bonds to fund infrastructure projects over three years, with the first batch of RMB 300 billion could be issued soon, notes BofAML.

Sylvia Sheng and team of Bank of America Merrill Lynch in their August 10, 2015 “GEMs Daily- Asia Edition” report, note the infrastructure bond plan would be very different from the massive fiscal stimulus introduced in 2009.
Bigger role for China's policy banks to boost infrastructure spending
Sheng and colleagues at BofAML point out that funding for infrastructure projects has been under pressure as Beijing reins in local government funding via LGFVs, and interest from private capital in public-private partnership is lackluster. The analysts note in the current sluggish real estate and manufacturing environment, infrastructure investment growth moderated to 19.2% in 1H15 from 20.3% in 1H 2014. The BofAML analysts anticipate the policy banks will play a pivotal role in boosting infrastructure spending through the infrastructure bond plan.

Citing a Reuters report, the analysts point out that the infrastructure bonds from policy banks will likely be issued in batches over the next three years. They anticipate better credit support from policy banks will likely help alleviate funding pressure on infrastructure projects and accelerate infrastructure investment growth and stabilize the real economy.

Citing reports from the Economic Information Daily, which is an affiliate of the state-run Xinhua News Agency, Sheng et al. point out that a first batch of RMB300 billion of infrastructure bonds could be issued soon. The analysts point out that China Development Bank and Agricultural Development Bank of China will place RMB 200 billion and RMB 100 billion of bonds, respectively, with the state-owned Postal Savings Bank of China.


This content is exclusively for paying members.

If you are subscribed and having an account error please clear cache and cookies if that does not work email or click chat.

Saved Articles

The Life and Career of Charlie Munger

Charlie is more than just Warren Buffett’s friend and Berkshire Hathaway’s Vice Chairman – Buffett has actually credited him with redefining how he looks at investing. Now you can learn from Charlie firsthand via this incredible ebook and over a dozen other famous investor studies by signing up below:

  • Learn from the best and forever change your investing perspective
  • One incredible tidbit of knowledge after another in the page-turning masterpiece of a book
  • Discover the secrets to Charlie’s success and how to apply it to your investing
Never Miss A Story!
Subscribe to ValueWalk Newsletter. We respect your privacy.

What’s missing today for many investors is real, straightforward advice.

Especially when it comes to Value Investing and Hedge Funds. 💵

That’s what makes ValueWalk Premium different. Some would say we’re “unusual.”

Our subscribers look forward to clear, easy-to-understand information they can act on.

Sign up for  today for only a few dollars a day and get a 3 day no obligation trial with a targeted 20% discount coupon code.

Cancel anytime during trial and you are never charged.

Limited time offer: For first 50 subscribers