China cities face surging funding costs on default concerns

SHANGHAI: China’s cities, towns and counties are facing surging borrowing costs as investors anticipate landmark defaults.

A local government financing vehicle (LGFV) in the country’s east was recently forced to pay a coupon on a bond that matched a record. Average financing costs in credit markets for the units that finance roads, bridges and sewers have jumped, with yields for some borrowers surging the most in six years.