Nothing beats a bond issue these days when you’re looking for an opportunity to jump to conclusions. No, we’re not talking about Rome, Athens, or Lisbon. Instead attention was on Shanghai, where the municipal government became the first local state entity to offer bonds in almost two decades.

It went well. Yields came in at 3.3 per cent on 5-year notes, lower even than South Korean sovereign debt of the same maturity. So the Chinese local debt crisis, involving Rmb10,700bn ($1,650bn) owed by local authorities across the country, is over?

Well, not really. Though Shanghai can now borrow money more cheaply than Malaysia, Australia and Israel, there’s a rather curious comparison within Chinese borders.

In late October, the finance ministry – ie the central government – issued bonds with yields 3.7 per cent than Shanghai’s Tuesday issue. But this doesn’t tell us that Shanghai is a safer bet than the Middle Kingdom itself. Instead, it suggests that recent steps to loosen monetary policy and ease credit shortfalls have had some impact. There’s a bit more money around now, so appetite is a bit stronger.

More importantly, however, is the matter of who is really issuing the debt.

China’s local governments have clocked up huge debt piles in the past few years, most of it owed to the country’s state-owned banks, and much of it off balance sheet. Fears have been growing over how those local authorities will find the money to pay the banks back – or whether, as Credit Suisse have suggested, the central government will need to infuse the banks with more capital to meet the gaping shortfall.

Some had hoped the bond market would offer the local governments a healthier way out – or at least a path to transparent and controlled leverage. If they could raise money themselves in the bond market, perhaps the central government could reduce the need for a costly bailout.

But while this new bond carries Shanghai’s name, it is directly linked to China’s central government’s bank account. In fact, it’ll be the same finance ministry that pays both the interest and the principal on the bonds.

It’s the local government equivalent of getting your parents to co-sign on your mortgage. In that sense, the market appetite does not tell us whether local government can find a cheap alternative source of funding away from the state coffers.

So while Shanghai can be relieved that the bond has done well, it should be thanking the Bank of Dad.