Shanghai's government issued its first debt issue this year on Aug 23 with a total value of 8.9 billion yuan ($1.40 billion).

The bonds were split into two tranches. The five-year tranche with a yield of 3.25 percent saw a transaction-to-subscription ratio of 2.2 to1, while the seven-year tranche with a yield of 3.39 percent had a transaction-to-subscription ratio of 2.1 to 1.

In 2011, Shanghai's local debt bonds had a three-year tranche with a yield of 3.1 percent and a five-year tranche with a yield of 3.3 percent.

The 10-year central government bond with a total value of 30 billion yuan auctioned on Aug 22 impacted the demand for the Shanghai bond. The treasury saw a bid-winning yield of 3.39 percent.

Meanwhile, East China's Zhejiang province and South China's Guangdong province and Shenzhen Municipality will also launch their local government debt bonds in the near future, reported the China Securities Journal.

About 5.7 trillion yuan or 53 percent of the local government debt will come due between 2011 and 2013, according to a report by the National Audit Office of China.