China LGFVs 2021 Outlook: Policy Functions Remain Intact; Credit Polarization Intensifying

Due to the impact of COVID-19 and the tightening financing policies from the No. 666 Announcement by the National Development and Reform Commission (NDRC), the issuance amount of China LGFVs’ offshore USD bond experienced a year-on-year decrease of c. 39% in 2020. According to the No. 666 Announcement, compliance and regulatory requirements are strictly imposed on the issuer and issuance scope for local government entities with a responsibility for financings for local governments, and the use of proceeds are restricted to refinancing offshore indebtedness maturing within one year.