China will "significantly raise" local governments' bond issuance this year from last year's 600 billion yuan, Xinhua-affiliated Economic Information Daily reported on Friday.

Citing an unnamed official source, the newspaper said municipal bond issuance will be much higher than last year's, perhaps hitting 1 trillion yuan. Besides, the government will boost the quota under which local governments could issue new low-cost bonds to replace existing, high-interest rate debt.

Last year, the debt swap quota was set at 3.2 trillion yuan, while China International Capital Corp estimated in order to swap all of debts in three years, average swap quota would be 3.7 trillion yuan in the next three years.

Together, the local government would need to issue 5 to 6 trillion yuan of bonds next year, the newspaper said.

The source said provinces who had a lower debt to GDP ratio this year could get a larger quota of new municipal bonds, while those with a high debt ratio would get a smaller quota.