China’s government needed lower borrowing costs to clean up a local debt mess. The central bank obliged. The three-month Shanghai Interbank Offered Rate has tumbled 194 basis points since March 31, heading for the biggest two-month drop since 2008. That coincides with the government kicking off a municipal bond program and the exchange of regional loans into lower-yielding notes. Jiangsu province and Xinjiang autonomous region both sold three-year debt for less than 3 percent last week, almost matching the sovereign, after the start of issuance was delayed in April. Central bank Governor Zhou Xiaochuan has ... (full story)