(Bloomberg) -- Chinese regulators gave approval to a debt-laden city in the country’s east to get funding support from banks, as they move to help more localities after making progress recently in bailouts. 

The banks were instructed earlier this month to provide additional help to local government financing vehicles in Weifang in Shandong province, according to people familiar with the matter. The banks were asked to provide support including loan refinancing, said the people, who requested anonymity as the information is not public. 

The move shows how the central government is expanding steps to manage debt risks, after initial successes in bailing out key regions like Tianjin. Bloomberg reported in April that the Chinese government planned to expand its bailout pilot to more indebted cities from an initial list of 12 provinces and municipalities.

The People’s Bank of China, the National Financial Regulatory Administration and the Ministry of Finance didn’t immediately respond to requests for comment.

The approval of support for Weifang comes after the city missed a series of repayments. In January, an LGFV there reached an agreement with creditors to partially repay and extend the payment deadline for nearly all of its 479 million yuan ($66 million) non-bond debts.

The previous round of bailouts managed to turn around investor sentiment in LGFVs by easing concerns over possible defaults on public bonds issued by them. Lured by decent yields, investors flocked into LGFV bonds again this year, pushing average coupons to a record low. 

Still, risks remain in private debts. Many distressed LGFVs have problems repaying trust products or other private loans on time, for example. 

--With assistance from Shuiyu Jing, Zhang Dingmin and Yujing Liu.

©2024 Bloomberg L.P.