China Securities Journal reporter from a number of 13BrokerThe person was informed that the exchange window guidance recently relaxed the reporting conditions for the issuance of corporate bonds by local financing platforms. The issuance of corporate bonds for the purpose of borrowing new and old, and liberalizing the upper limit of 50% of government revenue. The Exchange requires that the use of funds raised is limited to the repayment of exchange corporate bonds.
Insiders pointed out that the relaxation of the conditions for the application of new and old debt issuance is conducive to the smooth flow of financing and financing channels, which helps to ease the short-term debt repayment pressure of the financing platform. This move is a good news for the investment in urban investment bonds, and the yield of future city investment bonds may further decline. The relaxation may partially squeeze the trust company's political and trust business, but it will help the local financing platform to reduce the non-standard financing costs and resolve the risk of the Zhengxin business stock project.
Smooth city investment and financing channels
A brokerage official in South China revealed that the above-mentioned window guidance of the Exchange has not been issued yet, and it is only a verbal guide.
"There are no operating rules at present. However, according to the requirements, the time when the bond issuance documents for the purpose of borrowing new loans or remittances must be repaid. The debts to be replaced have not been repaid. When issuing corporate bonds and reporting new debts, the old debts will continue to exist. It is not possible to find the money and return it, and then issue new debts in this name." A brokerage underwriter in the north said.
The relaxation of the conditions for the application of new and old debt issuance will help smooth the channels for investment and financing. Li Wei (a pseudonym), a state-owned big bond investor, told the China Securities Journal that the purpose of the exchange’s move was to ease the short-term debt repayment pressure of the financing platform and to change space with time.
It is understood that the "upper limit of 50% of government revenues" for the guidance of the new and old bond issuance window has been an important "red line" that the exchanges adhered to when reviewing local financing platforms to issue corporate bonds. .
The Exchange previously (September 2, 2016) stated that the application for the issuance of corporate bonds by enterprises directly or indirectly controlled by local governments and their departments is temporarily implemented as follows: First, the issuer is included in the local government financing platform of the China Banking Regulatory Commission. For the list, the company shall not issue corporate bonds; the second is that the issuer belongs to the exit platform category, or involves land development, government project construction and other related businesses, and its income and cash flow from the local government during the reporting period shall not exceed 50%. However, except for the funds raised for provincial-level affordable housing. However, in the practice of auditing, it was found that some issuers had irregular corporate governance and that government and enterprises were not divided. It was not conducive to effectively prevent and resolve local government debt risks by adjusting accounting treatment to avoid the conditions of issuance. According to the unified deployment of the regulatory authorities, after repeated argumentation and prudent assessment, the exchange revised the screening criteria for local financing platforms, specifically: First, the “double 50%” was adjusted to “single 50%”, that is, during the reporting period. The issuer's income from the local government shall not exceed 50%, cancel the cash flow ratio indicator; the second is to adjust the indicator calculation method. In order to improve the rationality of the index, the issuer calculates the proportion of government revenue. In addition to the arithmetic mean of the proportion of government revenue in each year during the reporting period, the “weighted average method” can also be adopted.
City investment bond yield is expected to decline
"The relaxation of the conditions for the declaration of new and old debt is a positive news for the investment in urban investment." Li Wei said that the future yield and credit spread of the city's investment bonds may fall.
In fact, since July 2018, the higher-rated city investment bond yields have been on the way down. The data shows that on March 13, 2019, the 5-year Treasury bond yield (A++) was 4.31%, which was 0.92 percentage points lower than the 5.23% on July 2, 2018.
Under the risk aversion, urban investment bonds are still one of the investment types favored by institutions. "Now the city's qualified urban investment bonds are more popular. For example, the city-level city investment bond subscription ratio is 4 or 5 times, and the district and county level is also about 2 times. The subscription multiples are relatively high." Li Wei introduced.
Haitong SecuritiesChief Economist Jiang ChaoResearch reportZhong said that the value of investment in future urban investment bonds will be highlighted, and risk aversion will promote the city's investment market. On the one hand, the financing platform debt supervision marginal relaxation; on the other hand, due to the default of private enterprise debt, market evasion sentiment re-fermentation, the value of urban investment debt risk re-emergence.
Political and trust cooperation
In addition to issuing bonds, non-standard financing is also an important source of funding for local government financing platforms. “The relaxation of the conditions for the new bond issuance by the city, on the one hand, actually expanded the financing amount of the platform company and increased the funding channels. The trust company’s pre-investment of the political letter project was relatively safe; on the other hand, the new political letter business Will be affected." A trustee said that this has advantages and disadvantages for the trust and trust business.
Industry insiders said frankly: "At present, the government platform business tends to be a one-year project. The main purpose is to store debts and turnover, and there are not many new projects." The person in charge of a medium-sized trust company said, "This year, the company's internal rectification is strict. Without expanding the political and trust business, the scale and proportion of the political and trust business continued to decline."
From the perspective of funds, before, due to the policy and market risks of the political trust collection products, the mainstreambankSuch products have not been sold. However, the bank has recently started negotiations with trust companies, and the agency sales channel is expected to open.
Yin Xingmin, director of the Trust Research Center of Fudan University, said that the way of cooperation between government and credit is becoming more standardized. Trust companies must overcome the wait-and-see attitude of “waiting for the first class” and be cautious in choosing stronger.RevenueCollaborate on areas of competence.
(Article source: China Securities Journal)