With the start of the first working day after the New Year holiday on February 11th, the issuance of local government bonds (hereinafter referred to as “local bonds”) in February will continue the hot market in January, which is a major project of local government, people's livelihood security and other projects. Raise funds and make up the “short board” of infrastructure construction.
As the local debt amount of 1.39 trillion yuan was released to the local area in advance, according to statistics, in January 24 provinces and municipalities (autonomous regions, municipalities directly under the central government, cities with separate plans, the same below) issued a total of about 418 billion yuan of local debt, and in January of last year A number is zero.
The Ministry of Finance has publicly demanded that local debts be alleged to be completed by the end of September this year. In the first three quarters of this year, local bonds will be accelerated to a high level or normal, and bonds between provinces and cities will be issued.interest rateThere will also be differentiation.
The speed and scale of debt is unprecedented
In the context of the complicated external environment and the downward pressure on the economy, in order to keep the economic growth rate in a reasonable range, it is necessary to strengthen the fiscal policy and increase efficiency to support the bottom economy. One of the main means is to speed up the issuance of local debt. And increase the local debt quota to increase the “short board” area of local government investment infrastructure construction and stabilize investment.
InFixed asset investmentChina is the infrastructure construction investmentMain force. Infrastructure investment last year increased by only 3.8% year-on-year, which was a significant drop from the growth rate of the previous year (19%). Due to the large-scale and rapid growth of implicit debts formed by local government illegal and illegal debt guarantees, the central government has adopted three orders to curb the growth of implicit debts of local governments. Local governments are more dependent on the only legitimate means of financing – issuing local debts.
In the past years, the issuance of new bonds by local governments was often concentrated in the second half of the year. This was mainly because local government bond quotas need to be finalized in the national two sessions in March, and then gradually allocated to county and municipal governments, often in May and June.
In order to change the strange situation of “no debts can be issued in the first half of the year”, to ensure the funding needs of key projects, and to play an important role of government bond funds in stabilizing investment, expanding domestic demand, and supplementing shortcomings, the National People’s Congress Standing Committee authorized the State Council this year. The local government added a debt limit of 1.39 trillion yuan in advance. In January, the local government added new debt lines to 36 provinces and cities.
On January 21, Xinjiang successfully issued the first batch of 10 billion yuan of local debt in 2019, officially kicking off the issuance of local bonds this year, followed by Henan, Shandong, Fujian, Hebei, Tianjin, Guizhou, Qingdao, Yunnan, Jiangxi, Hubei, Sichuan. , Anhui, Xiamen, Gansu, Jiangsu, Hainan, Beijing, Guangxi, Inner Mongolia, Shenzhen, Shaanxi, Zhejiang, Guangdong and other places have issued bonds.
In January, local debts were issued about 418 billion yuan, of which new bonds were about 368.8 billion yuan, and refinancing bonds (borrowing new ones) were about 49.2 billion yuan.
The speed at which local governments have increased bond issuance is unmatched in previous years. Take 2018 as an example. From January to April, there was no new bond issued by the local government. In the fifth month, more than one billion yuan of new bonds were issued. The total number of new bond issuance in the first half of the year was only 332.9 billion. yuan. The size of the bond issue in January this year exceeded the first half of last year.
At present, only 12 of the 36 provinces and cities that can issue bonds have not yet issued bonds. Some of them have set up underwriting syndicates in early February to prepare for the next formal issuance of bonds.
Although the scale of local government bond issuance this year will not be announced until the two sessions of the National People's Congress, it has already been clear at the Central Economic Work Conference at the end of last year. This year, the scale of local government special bonds will be greatly increased. Institutions generally expect that local government special bonds will exceed 2 trillion yuan this year, compared with 1.35 trillion yuan last year.
In addition, the market generally expects local government general bonds to be nearly 1 trillion yuan this year (previous year: 830 billion yuan), so the local government's new bond size this year is expected to exceed 3 trillion yuan.
Local government bonds are divided into general bonds and special bonds. The former is a government bond issued for non-profit public welfare projects and repaying principal and interest on the general public budget. The latter is a public welfare project with certain income and corresponding to the project. GovernmentalfundAnd government bonds with special income and interest payments.
Xu Hongcai, assistant secretary of the Ministry of Finance, recently publicly stated that in March, after the National People's Congress approved the quotas for all local governments in 2019, the Ministry of Finance will release the approved quotas to the local authorities in a timely manner, and the local governments will issue bonds in a balanced manner during the budget year. Completed before the end of the month, this will better use the issued local government bonds in the same year.
Funds are invested in infrastructure
Funds raised by local governments through bond issuance are mainly used for major infrastructure projects such as roads, land reserves, schools, water conservancy, environmental protection, railways, and shantytown renovation.
For example, Zhejiang Province, which has the largest debt issue in January, has issued a total of 46.3 billion yuan in Zhejiang in January, including 23.2 billion yuan in general bonds and 23.1 billion yuan in special bonds.
Specifically, Zhejiang Province issued 23.2 billion yuan of general bonds for 438 projects, with an average of about 0.53 billion yuan for each project. These projects are concentrated in municipal highways, new construction projects in schools, comprehensive environmental improvement, and waste water treatment.
The 23.1 billion yuan special bonds issued by Zhejiang are used for the land reserves of six prefecture-level cities in Hangzhou, Wenzhou, Shaoxing, Jinhua, Zhangzhou and Lishui. For example, Hangzhou City has a land reserve special bond of 9 billion yuan. The funds raised by issuing bonds will be used for land reserve projects of 40 plots.
The total amount of debt issued by Henan Province in January was about 45.3 billion yuan, which is also in the forefront. The funds raised by issuing bonds are mainly used for railways, highways, schools, shantytowns, rail transit, land reserves, medical care and other projects.
In addition to the priority for the construction of infrastructure projects such as major projects and people's livelihood projects, the local government's new bonds require that the local government's executive meeting at the end of January require that local governments increase their bonds to give priority to repaying the arrears of private enterprises.
In addition, with the expiration of 1.3 trillion yuan of local government bonds this year, the local government's issuance of refinancing bonds will also hit a new high, which will be used to borrow new and old, lengthen the debt repayment period, and alleviate local government repayment pressure. According to China Credit Rating, the scale of local refinancing bonds issued last year was about 650 billion yuan, and this year it is estimated to be about 1 trillion yuan.
(Article source: First Finance)