SUB-SOVEREIGNDATA REPORTS 15 SEPTEMBER 2015TABLE OF CONTENTSOnshore Bond Market 2Fiscal Situation 4Real Estate Market 6Economic Statistics 7Background Tables 8Regulatory Policy Updates 13Moody's Related Research 14ANALYST CONTACTSNicholas Zhu, Ph.D. 86-10-6319-6536 VP-Senior Analyst nicholas.zhu@moodys.comDaisy Y Lu 86-10-6319-6577Associate Analyst daisy.lu@moodys.comDebra Roane 612-9270-8145VP-Sr Credit Officer debra.roane@moodys.comSub-sovereignChinese Regional and Local Governments Debt and Finances SnapshotOur quarterly chart and data round-up of Chinese Regional and local governments financial and debt trends.On 29 August, Chinas (Aa3 stable) National Peoples Congress released the State Councils update of debt statistics for regional and local governments (RLGs). The update shows that RLG debt at the end of 2014 rose by more than one third to RMB24 trillion ($3.7 trillion), the equivalent of 38% of Chinas 2014 GDP, from RMB17.9 trillion as of June 2013.Higher levels of both direct and indirect debt suggest that RLG indebtedness has increased on account of new borrowing since June 2013. Direct RLG debt obligations rose 41%, while indirect and contingent liabilities rose 23%.Exhibit 1 shows the hypothetical effects of a 41% increase in direct debt for each individual RLG. This proportion equals the growth in direct debt for the RLGs as a whole between June 2013 and December 2014. Such an increase would raise the debt/revenue ratios of 13 provinces above the national average of 86%, the target ceiling set by the central government for RLG debt in order to limit any further increase in RLG leverage.Exhibit 1Regional and Local Governments Debt Ratios if Debt Rises by 41%Source: China Ministry of FinanceMOODY'S INVESTORS SERVICE SUB-SOVEREIGNThis publication does not announce a credit rating action. For any credit ratings referenced in this publication, please see the ratings tab on the issuer/entity page on www.moodys.com for the most updated credit rating action information and rating history.2 15 SEPTEMBER 2015 SUB-SOVEREIGN: CHINESE REGIONAL AND LOCAL GOVERNMENTS DEBT AND FINANCES SNAPSHOTOnshore Bond MarketExhibit 2RLG Bond Issuance Has Taken off from a Low Base in 2014 (RMB billion)Source: Bond prospectusesExhibit 3Three Quarters of RLG Bonds Issued in 2015 Have Been Through Public Auction (as of 31 August)Source: Bond prospectusesExhibit 4Growing Differentiation of Pricing as Measured by RLG Bond Yield Spreads Over Sovereign Bond Yields (as of 31 August 2015)Source: Bond prospectusesMOODY'S INVESTORS SERVICE SUB-SOVEREIGN3 15 SEPTEMBER 2015 SUB-SOVEREIGN: CHINESE REGIONAL AND LOCAL GOVERNMENTS DEBT AND FINANCES SNAPSHOTExhibit 5Most Privately Placed RLG Bonds Yielded Around 50 Basis Points More Than Sovereign Bonds (as of 31 August 2015)Source: Bond prospectusesExhibit 6RLG and Sovereign Bond Yield Spreads Have Been in a Narrow Band of Around 50 Basis Points on the Seconda...
