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First LGFV default stirs China’s bond market

A quasi-municipal organisation in the Xinjiang Uighur Autonomous Region missed bond payment, making it the first bond default by LGFVs, raising concerns about the security of the bond once viewed as nearly risk-free.

A unit of the Xinjiang Production and Construction Corps (XPCC), a unique economic and paramilitary organisation with features similar to an LGFV to raise funds for the local government and carry out infrastructure investment, missed payment of interest and principal on a 500 million yuan ($72.6 million) note, according to the company's statement to Shanghai Clearing House late Monday.

The company said on . . .

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