In order to standardize the administration of local government bond issuance and protect the legitimate rights and interests of investors, the Ministry of Finance has formulated and issued the Measures for the Administration of Local Government Bond Issuance (hereinafter referred to as the Measures), stipulating the meaning, issuance, custody and rating of local government bonds. The measures will go into effect on January 1 next year.

The measures point out that local governments shall, in accordance with the law, organize on their own the issuance and repayment of local government bonds. Local financial departments, members of local government bond underwriting syndicates, credit rating agencies and other relevant entities shall, in accordance with the principles of marketization and standardization, do a good job in the issuance of local government bonds. The local financial departments shall earnestly fulfill the debt repayment responsibility, timely pay the principal and interest of the bonds, and maintain the government's credibility; We will strengthen the tracking and management of special bond projects, strictly implement the requirements for the balance between project revenue and financing scale, ensure the repayment of principal and interest of bonds, and guard against the repayment risks of special bonds.

The measures stipulate that local financial departments should issue local government bonds within the limits of regional limits approved by The State Council. Local financial departments shall reasonably determine the maturity structure of bonds based on such factors as project maturity, financing cost, distribution of maturing debts, investor demand and bond market conditions. In combination with the actual situation and on the premise of protecting the legitimate rights and interests of creditors in accordance with the principle of marketization, principal repayment methods such as repayment upon maturity, repayment in advance and repayment by installments can be adopted.

In terms of credit rating and information disclosure, the measures require that credit rating agencies should carry out credit rating in accordance with the principles of independence, objectivity, impartiality and prudence. Local financial departments shall timely disclose the issuance arrangement of local government bonds, basic information of bonds, local financial and economic operation and debt situation, bond credit rating report, etc. The special bonds shall also fully and in detail disclose the project information, the project income and financing balance plan, the government-managed funds or special income corresponding to the bonds and other information.

According to the measures, local financial departments should reasonably set the scale of individual bond issuance, and local government bonds issued publicly should be encouraged to be issued continuously. Local government bonds may be issued by means of underwriting or bidding. Local financial departments should also actively issue local government bonds through the over-the-counter market of commercial banks in accordance with relevant regulations of the Ministry of Finance. Local financial departments shall, in light of the market environment and the task of issuing bonds and other factors, reasonably determine the number of members of the underwriting syndicate and the lead underwriters, the selection methods and the formation process, etc. The members of the underwriting syndicate shall be financial institutions established in accordance with law within the territory of China; If a branch of a foreign bank participates in underwriting local government bonds, it shall obtain written authorization from its head office on the matter. Unless otherwise stipulated by the Ministry of Finance, local government bonds shall be subject to general registration and trusteeship at the central Treasury Bond Registration and Settlement Limited liability company, and to sub-registration and trusteeship at the registration and trusteeship institutions prescribed by the state.

The measures also make specific provisions on the duties, supervision and inspection of relevant institutions.

Source: Ministry of Finance, PRC