Recently, the Ministry of Finance ("MOF") has distributed the Circular on Doing a Good Job in the Issuance of Local Government Bonds in 2017 (the "Circular").
The Circular outlines specific requirements from eight perspectives, such as "enhancing the degree of marketization in the issuance of local bonds constantly and actively exploring ways to establish a follow-on issuance mechanism", "further regulating the credit rating for local bonds and bettering the information disclosure quality", and "further facilitating the diversification of investment subjects and improving the liquidity in the secondary market". Also, the Circular encourages qualifying places to make studies to promote over-the-counter business in the interbank local bond market, make it convenient for non-financial institutions and individuals to invest into local bonds, encourage the issuance of local bonds in the Shanghai Free Trade Zone and other free trade zones, attract more foreign-invested incorporated financial institutions to engage in the underwriting of local bonds, and urge the acceptance of more local bonds as the pledge for the local treasury cash management. Moreover, the Circular requires that the China Government Securities Depository Trust & Clearing Co. Ltd., the Shanghai Stock Exchange, the Shenzhen Stock Exchange and other supporting departments shall establish and improve the local bond issuance service mechanism, design reasonable work procedures for local bond issuance services, and strengthen internal control in a severe manner.