Forex Flash: Chinese local debt catches eye of ratings agencies – Deutsche Bank

FXstreet.com (Barcelona) - The FT recently reported that a senior Chinese auditor and vice-chairman of China's accounting association have described the local government debt situation in the country as out of control. According to Macro Strategy Analysts J. Reid and C. Tan at Deutsche Bank, “These comments comes after the recent warnings from Fitch and Moody's about the risks of China's local government debt.”

The auditor says his firm has stopped signing off on bond sales by local governments as "most don't have very strong debt servicing abilities". On a related note, there has been some focus on Chinese corporate defaults after Chinese solar company, LDK Solar, reportedly defaulted on a bond on Monday. This follows last month's default of its peer Suntech Power, which was once the world's largest solar-panel maker by capacity.