(Yicai) Jan. 10 -- The early repayment amount for urban construction investment bonds in China soared to a new record high in December as the country vigorously pushed for local governments to resolve the implicit debt risk.

Some CNY83.7 billion (USD11.7 billion) urban construction bonds were paid in advance in the fourth quarter of last year, with the figure for December alone soaring 178 percent to CNY47.3 billion from November, according to a report released yesterday by the Development Research Center of GF Securities.

Urban construction investment bonds are bonds issued by investment and financing platforms of local governments. They are the main component of China's local government implicit debt.

The financial pressure on Chinese local governments increased during the three-year Covid-19 pandemic, causing a crisis for some urban construction investment bonds. Therefore, from the second half of last year, the central government introduced a series of measures to defuse debt risks, including allowing local governments to issue special refinancing bonds to repay urban construction investment bonds.

Since October, 29 Chinese provincial-level regions issued special refinancing bonds worth a total of CNY1.39 trillion (USD193.8 billion) to repay urban construction investment bonds. Southwestern Guizhou province issued CNY226.4 billion (USD31.8 billion) of such bonds, ranking first among all provincial-level regions.

Meanwhile, the issuers lowered the coupon rates of urban construction investment bonds, prompting the holders to sell back the bonds. Some 547 urban construction investment bonds worth CNY306.2 billion were sold back last year because of the low coupon rates, up about 50 percent from the year before, the report also showed.

With the combined effect of supporting measures and lower coupon rates, the size of China's outstanding urban construction investment bonds has greatly narrowed since October. By the end of December, the amount of unpaid urban construction investment bonds with an interest rate of 5 percent or higher fell CNY600 billion to below CNY3.9 trillion from the highest figure last year, according to the GF Securities report.

Editors: Dou Shicong, Futura Costaglione