(Yicai) Nov. 18 -- China’s recently announced CNY12 trillion (USD1.66 trillion) program to refinance hidden local government debt will be a boon to the country’s cultural tourism sector, according to industry sources.

Local authorities often join in new tourism projects by investing and offering special subsidies, the people told Yicai, but if the funding is not fully secured, this can result in accounts receivable or deferred revenue. So stepped up efforts to reduce local government debt will ease the financial strain on the hospitality and tourism enterprises developing these projects, they said.

Many such enterprises, which develop scenic spots, transportation, accommodation, and catering, are in financial trouble. A court declared Luoyang-based Mengjin Cultural Tourism Development Group bankrupt at the end of February, after the state-backed firm’s liabilities hit CNY90.4 million (USD12.5 million).

Similarly, Zhenjiang Cultural Tourism Group has been actively raising funds. It issued ultra-short-term financing bonds worth CNY297 million (USD41 million) in the interbank bond market. The firm also privately sold its first tranche of corporate bonds to professional investors, which were listed on the Shanghai Stock Exchange on June 4.

The local government refinancing program that China unveiled on Nov. 8 could greatly ease the debt pressure on local cultural tourism enterprises such as Zhenjiang Cultural Tourism Group, said Wei Changren, founder of tourism-related financial news website Btiii.com.

The debt swap program will provide local cultural tourism groups with the opportunity to rebuild their businesses and improve investment, Wei added.

According to other industry insiders, such firms must enhance their competitiveness when vying for special government bond funding in regions with relatively tight fiscal budgets.

Editors: Shi Yi, Martin Kadiev