After taking a look back at 2013, here are my predictions for muniland in 2014.
The biggest muniland story this year will be the development of the Chinese municipal bond market. It’s not often that you get to watch a government launch a bond market. And China’s will be massive. From the South China Morning Post:
The [Chinese] mainland’s quest to solve its $3 trillion-and-growing public debt problem by starting a domestic municipal bond market hinges on the one thing officials are most afraid of: transparency.
As markets absorb the results of the latest audit of state finances, Beijing’s long-standing vow to develop a municipal bond market to curtail rapid growth in other types of hidden public debt will take centre stage once more.
By letting local governments sell bonds for cash, Beijing wants to rely on nimble markets rather than inflexible regulations to keep spendthrift units in check.
The stakes are high. A bond market is the centrepiece in a blueprint to mop up fiscal troubles and keep the economy growing at an even pace, giving it room to start other financial reforms.