China’s Embattled LGFVs Are Consolidating Like Never Before

China’s local government financing vehicles are merging and reshuffling assets among themselves at record speed, as authorities seek to use consolidation to help ease debt pressureand improve fundraising.

LGFVs, which mostly fund infrastructure projects, were involved in 240 deals including mergers and asset transfers between January and May, more than double on year, according to calculations based on Essence Securities Co.’s LGFV consolidation monthly report. The figure also marks the highest for the period since 2010 when the Chinese brokerage started tracking the data.

Focus has been increasing on the $9 trillion debt market for LGFVs, which ...