Analysis: Struggling China local governments find a fundraising loophole, lifeline in “pearl bonds”

News Snapshot:

SHANGHAI/HONG KONG, May 31 (Reuters) - China's cash-strapped local governments have suddenly rushed to an unusual corner of the debt market in Shanghai where ambiguous rules offer ways to skirt restrictions on onshore borrowing. Some analysts have described local government financing vehicles (LGFVs) as the "black hole" of China's financial system, with debts of more than $9 trillion and rising. But Beijing is counting on their continued spending to help lift a patchy economic recovery. Sales by LGFVs of so-called "pearl bonds", which are issued as foreign debt in Shanghai's free trade zone, have soared to a record 72 billion...