To maintain stable economic development, given the international financial crisis, the central government decided that in 2009 the Ministry of Finance (MOF) would issue 200 billion yuan of debt on behalf of local governments.  From March 27 to May 22, MOF has issued 111.8 billion yuan of debt through 26 issuances on behalf of 23 local governments, according to data from the MOF website.

Investors believe the central government is implicitly behind these issuances and therefore these debts are very similar to the central government debts in terms of interest.  All these local government debts are three year notes with commercial banks as major purchasers.  The average over subscription rate was 158%.  Interbank debt market dominates the trading and management of these debts.  111.73 billion of the 111.8 billion yuan total issuance is managed by commercial banks, with the rest being managed by securities brokers /dealer.