Funding Dries Up for China’s Indebted Local State Vehicles (1)

China’s riskier local state-investment arms are selling fewer new bonds as measures to rein in leverage bite, adding to the credit polarization seen across the nation as growth slows.

Local government financing vehicles in nine regions, including Inner Mongolia and Jilin, either didn’t sell debt or raised less money than the domestic bonds that matured in the second quarter, according to data compiled by Bloomberg. That’s up from four regions in the prior three months.

The fate of LGFVs, typically heavily indebted firms tasked to build infrastructure projects, is back under the spotlight after Beijing further tightened oversight of local ...