China's local government likely to restructure debt

The grand plan for local government debt restructuring is quite clear now. The central government has probably finalised the count of total local government debt and should make an announcement soon, says Societe Generale.

Since certain debt is now formally recognised as government debt, it is only logical that the right form for that debt should be government bonds, adds SocGen. Hence, the central government has kick-started a debt-to-bond swap programme. 

The objective of the restructuring is not only to help local governments but also, and more importantly, to contain future debt growth and deepen the bond market at the same time.