Shanghai Bond Sales May Ease Debt Fears

China's southern province of Guangdong today issues its first direct sale of local government bonds, under a pilot program expected to cover more cities. The auction of Guangdong local government bonds came after Shanghai municipality offered paper of its own on Tuesday.

This is the first time the regional governments have been allowed to sell debt directly after the Central Government approved four regional governments - Shanghai, Guangdong, Shenzhen special economic zone (bordering Hong Kong), and the eastern province of Zhejiang - to participate in a trial program. Guangdong plans to auction 6.9 billion yuan (US$1.1 billion) in bonds to institutional investors.