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SHANGHAI – A Chinese government financing unit in the southwestern Guizhou province said it will extend the maturity of bank loans worth 15.6 billion yuan ($2.3 billion) by 20 years.<\/p>\n
China’s local governments, especially those in less-developed regions such as Guizhou, are struggling to meet debt obligations in an economy hit by COVID and a property downturn.<\/p>\n
The debt extension comes after China’s cabinet said last January it will allow local government financing vehicles (LGFVs) in Guizhou to delay debt payments and undergo debt restructuring.<\/p>\n
LGFVs are typically investment companies that raise money and build infrastructure projects on behalf of local governments.<\/p>\n
Zunyi road and bridge construction (group) limited said in a Friday statement it had agreed with financial institutions on a debt restructuring plan.<\/p>\n
The plan allows interest rates of the $2.3 billion loans to be adjusted to between 3% and 4.5% per year, and the company will only pay interest without principal during the first ten years of the extension.<\/p>\n
“The debt restructuring can help the company alleviate short-term debt repayment pressure and optimise debt structure,” it said. ($1 = 6.8845 Chinese yuan renminbi)<\/p>\n
(Reporting by Shanghai Newsroom, Editing by Louise Heavens)<\/p>\n<\/div>\n\n
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