Fitch says some China LGFV defaults likely (timing uncertain)

Ratings agency Fitch says defaults on public bonds by Chinese local government financing vehicles (LGFVs) are becoming more likely

  • will probably trigger a repricing of the market
  • widespread LGFV defaults remain a tail-risk
  • No Chinese LGFV has defaulted to date on its publicly traded debt


  • Passage of the 2014 Budget Law stated that LGFVs are no longer recognised as public-sector liabilities
  • Are not officially eligible for government support (However, there remains a conflict between these stated central government policies and implicit support of LGFVs in practice at the local level)

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