The Ministry of Finance ("MOF") has recently issued the Opinions on Working Effectively on the Issuance of Special-purpose Bonds by Local Governments (the "Opinions").
The Opinions set out requirements in six respects, including "accelerating the issuance of special-purpose bonds", "making the issuance of special-purpose bonds market-oriented to a larger extent" and "optimizing bond issuance formalities". Further, the Opinions clearly specify that the issuance of bonds by local governments will not be subject to requirements on the quarterly balance of issuance this year and that by the end of September this year, an aggregate of at least 80 percent of new special-purpose bonds shall have been issued in all regions in principle. In addition, the Opinions note that provincial departments of finance shall consider different factors, including the scale of special-purpose bonds issued and situations of the bond market, to organize the issuance of special-purpose bonds through bidding (including flexible bidding), public commitment or otherwise. Furthermore, the Opinions emphasize that, the underwriter shall give comprehensive consideration to various factors, such as treasury bonds of the same term, the interest rate of policy financial bonds, and the valuation of local bonds in the secondary market, while deciding on the bidding price, and that any local department of finance shall not exert influences on underwriters by making use of fiscal deposits or others, in an attempt to force the prices down.