China sold 1.18 trillion yuan (US$ 176 million) in new local government bonds in the first quarter with proceeds mainly earmarked for on-going infrastructure projects.

The pace is faster and financing costs have notably decreased, an official of the Finance Ministry said. The average interest rate for local government bonds issued in Q1 is 3.34%, lower than the 2018 average of 3.89%.

The bonds have an average maturity of 7.37 years, an increase of 1.27 years compared with the 2018 average level, official data shows. More than 60% of the funds raised will be used for on-going infrastructure projects such as the renovation of shanty areas, affordable housing and transportation.

Local governments are allowed to sell a maximum of 3.08 trillion yuan in new bonds this year, of which the 930 billion yuan are general bonds and 2.15 trillion yuan are to fund specific projects.

In addition, a pilot program to sell local government bonds over the counter at commercial banks to retail investors was warmly welcomed, said an official in a Xinhua News Agency report. A combined 6.8 billion yuan in local government bonds was sold via the pilot program, it said.