China's Shandong province will issue a total of 13.7 billion yuan ($2.21 billion) of five-, seven- and 10-year municipal bonds on July 11.

The proceeds will be used to support public projects such as rebuilding of shanty housing and construction of new roads, the Shandong government said in its bond prospectus published late on Friday on the website for China major bond issues (www.chinabond.com.cn).

Shandong province is the second local government to issue municipal bonds after Guangdong.

The Ministry of Finance said in late May that 10 local governments had been given quotas to issue a combined 109.2 billion yuan ($17.52 billion) worth of municipal bonds this year.

Earlier, the finance ministry announced China's watershed move of allowing the 10 local governments issue and redeem their own bonds in an experiment to straighten out messy state budgets, and start the clean-up of its $3 trillion public debt problem.

Governments in Shanghai, Zhejiang, Guangdong, Shenzhen, Jiangsu, Shandong, Beijing, Qingdao, Ningxia and Jiangxi will be part of a pilot?plan that effectively creates China's first-ever municipal bond market.

Guangdong helps kick off new era	Municipal debt market takes big step forward