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Xingjiang the first for bonds sale

XINJIANG will issue 3 billion yuan (US$439 million) in bonds, the first local government bond sale in China, to help finance the country's 4-trillion-yuan stimulus package.

China's Ministry of Finance will auction the three-year bonds on behalf of the Xinjiang Uygur Autonomous Region on Friday, the ministry said in a notice today.

The bonds will be issued between March 30 and April 1, with the trade in the secondary market starting on April 3.

The Xinjiang Finance Department said on its Website that the money raised will be used to reinforce schools and hospitals against earthquakes, build roads, renovate old districts and build low-rent homes.

Local governments had been prohibited from issuing bonds but the global financial crisis forced the country to carry out proactive fiscal policies, such as local bond sales, to boost domestic demand and increase investments in public facilities.

Of the country's 4-trillion-yuan stimulus plan, the central government will fund only 1.18 trillion yuan and the rest will come from local government, government-backed loans and corporate bonds.

The country has set this year's central government deficit at 750 billion yuan, 570 billion yuan more than last year. As well, the State Council will let local governments issue 200 billion yuan worth of government bonds through the Ministry of Finance, which will go into provincial budgets.

The money will be used for affordable homes, infrastructure in rural areas, health care, biological projects and rebuilding earthquake-hit regions, according to the ministry.

However, the debts have to be auctioned via the ministry as the country has not set up issuance channels for local bonds to keep pace with the fast-growing bonds market.


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