(Yicai Global) Feb. 28 -- China's local government financing vehicles, which often target infrastructure development, will continue to receive state support so they are likely to be less affected by the new coronavirus outbreak than some private sector firms, according to Moody's.

LGFVs will maintain access to financing channels and benefit from easier credit policies, which will protect them against deteriorating credit quality, the New York-headquartered financial company said in a report published in Chinese yesterday. 

This is why state-backed projects may look like a better bet than others. "We believe onshore investors will continue to prefer LGFV bonds over similarly rated non-LGFV corporate bonds, especially at the lower end of the rating scale," analyst Sarah Xu wrote in an English-language report about the topic posted on the firm's website on Feb. 25.

The Covid-19 epidemic, which has particularly wreaked havoc in China's tourism and retail sectors, is expected to be contained by late April, according to Chinese medical experts. 

But if disruptions continue for an extended period, LGFVs, and particularly those of low-tier cities and those largely exposed to commercial business, will start to feel the heat, according to the Chinese report.  

However, China may increase infrastructure spending to stimulate growth once the epidemic situation stabilizes, the report added.

Editor: Emmi Laine