Nothing beats a bond issue these days when you’re looking for an opportunity to jump to conclusions. No, we’re not talking about Rome, Athens, or Lisbon. Instead attention was on Shanghai, where the municipal government became the first local state entity to offer bonds in almost two decades.
It went well. Yields came in at 3.3 per cent on 5-year notes, lower even than South Korean sovereign debt of the same maturity. So the Chinese local debt crisis, involving Rmb10,700bn ($1,650bn) owed by local authorities across the country, is over?
Well, not really. Though Shanghai can now borrow money more cheaply than Malaysia, Australia and Israel, there’s a rather curious comparison within Chinese borders.
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