Local Government Special Debts Boosted The Start Of Major Projects

Local government special debts boosted the start of major projects

28/10.2019 "Shanghai Securities News" 

After entering the fourth quarter, under the assistance of local government special debts, many places ushered in the start of major projects. In Jiangsu, Hubei, Jiangxi, Henan and other places, major projects with investment scales of tens of billions of yuan have been started.

Many industry insiders believe that under the stable investment tone, the issuance of special bonds will further expand effective investment. It is estimated that the issuance of new special bonds in the fourth quarter will be around 100 billion yuan. Under the constraints of debt and financial resources, infrastructure investment will be structurally strong. The infrastructure areas such as high-speed rail, rail transit, and municipal facilities, which are reported to grow rapidly, are worthy of attention.

Increase the effectiveness of special bond issuance

The National Standing Committee held on September 4 requested that the precise policy should be strengthened to do a good job in the "six stables" and determine the measures to speed up the issuance and use of special bonds by local governments, so as to promote effective investment to support short-term expansion of domestic demand.

According to public data, as of September 30 this year, the total number of issued bonds in 31 provinces (autonomous regions, municipalities) and six cities with separate plans was 418.22 billion yuan. Among them, general bonds were 1,667.6 billion yuan and special bonds were 2,514.6 billion yuan. From the perspective of bond use, new bonds were 3,043.8 billion yuan, refinancing bonds were 1,019.2 billion yuan, and replacement bonds were 119.2 billion yuan.

According to the latest data from the National Bureau of Statistics, infrastructure investment (excluding electricity, heat, gas and water production and supply) increased by 4.5% year-on-year in the first nine months of this year. In the previous August and July, the year-on-year growth rate of infrastructure investment was 4.2% and 3.8%, respectively. The growth rate of infrastructure investment has gradually picked up, and the effect of increasing the issuance of special bonds has already appeared.

The China Credit Rating Local Government and the urban investment industry research team said that some provinces and cities have planned to use the amount issued in advance during the year, but subject to the Budget Law and Circular No. 43, the provincial special debt balance cannot exceed the debt limit during the year. The theoretical maximum issuance scale for new special bonds in the fourth quarter is 1.19 trillion yuan. Considering that the unused quota is concentrated in developed regions with weak debt-issuing power and project reserves and start-up conditions, it is estimated that the issuance of new special bonds in the fourth quarter will be between 200 billion yuan and 300 billion yuan.

Mao Shengyong, spokesperson of the National Bureau of Statistics, revealed that the next step is to gradually form a practical workload for the special debts and gradually put these projects in place. During the issuance process, the central government or relevant departments have taken into account the local debt bearing capacity, local government debt classification management, where the debt level is higher, the amount may be smaller, the solvency is better, the economic development potential is greater, and the development level Where the project is better and the project's profit prospects are better, the amount of special debt may be higher. Through the issuance of special bonds, we hope to better mobilize private capital to do a good job in infrastructure construction.

Many major projects are concentrated

Under the special debt assistance, the market expects the start of the major projects in the fourth quarter.

Since October, Jiangsu Huai'an's second major industrial project started in 2019, involving 102 projects with a total investment of 61.931 billion yuan. Henan Dengfeng City signed a contract for major investment projects in the second half of 2019, involving 14 major projects. The total contracted amount was 14.78 billion yuan, covering cultural tourism and service industries, general aviation and other fields; Jiangxi Ji'an major industrial projects started in the third time, and the total investment of 76 major industrial projects in the city was 34.57 billion yuan.

In addition, Hubei Wuhan announced that it will accelerate the construction of projects under construction of more than 1611 billion yuan, and restart 250 major projects during the year.

In the latest research report, Industrial Securities said that in the first two weeks of October, the National Development and Reform Commission approved 56.4% of the projects approved, of which local government projects increased by over 28% year-on-year, continuing the high growth since September, local investment willingness Continue to rise.

According to the reporter of the Shanghai Securities Journal, some places have completed the declaration of three batches of special bonds, and there are still places to start the fourth batch of project declarations. Under the guidance of the policy of “funds and projects”, future financial investment will be closely related to the start of stock projects and new project declarations.

The analysis of the Yangtze River macro-receiving Zhao Wei team pointed out that from the previous public data, in the start of the stock project, the major delivery project or the promotion focus. From the perspective of new project declarations, the declaration volume of new delivery projects such as high-speed rail/intercity and rail transit has increased rapidly.