The central government has ordered a swap plan amounting to 1 trillion yuan ($160 billion) of low-yield municipal notes that will replace legacy liabilities, a move intended to ease local governments' mounting interest repayment pressure.

In a statement on its website on Monday, the Ministry of Finance confirmed the swap plan. Domestic media reports had speculated that the plan would be for 3 trillion yuan.

The swap plan is an obvious attempt to cut local governments' financing costs on total liabilities, which brokerages estimate exceed the equivalent of $3 trillion.