GUANGDONG’S provincial government auctioned a total of 14.8 billion yuan (US$2.38 billion) in five, seven and 10-year bonds at yields of 3.84, 3.97 and 4.05 percent, respectively, traders said yesterday, in line with market expectations.

    Market forecasts centered around 3.87 percent (ranging from 3.83 to 3.95 percent) for five-year bonds, 3.99 percent (ranging from 3.93 to 4.08 percent) for seven-year bonds, and 4.07 percent (ranging from 4.02 to 4.14 percent) for 10-year bonds.

    This marks the first time a local Chinese government has issued bonds directly to the primary market without the Ministry of Finance acting as a proxy.

    China announced in May that it would allow local governments to issue U.S.-style municipal bonds for the first time, in an experiment to straighten out its State budget and start the clean-up of its massive local government debt problem.

    Guangdong said in its bond prospectus that the funds raised will be used to support public projects such as the refurbishment of shanty housing and construction of new roads.

    The province, which boasted annual gross domestic product (GDP) of 6.2 trillion yuan in 2013 — more than three fourths of South Korea’s GDP that year — said its total debt-to-income ratio stood at 59.41 percent, less than half of the national level of 113.41 percent and lower than the international standards of 90-150 percent. (SD-Agencies)