As of the end of September, a total of 5.6789 billion yuan has been issued, and 434.5 billion yuan of new bonds have been issued——
The use of local debt "funds follow the project"
Our reporter Zeng Jinhua
□ Since the beginning of this year, the scale of local bond issuance has increased significantly, and the pace of issuance has been optimized.
At the same time, the issuance period has been extended and the issuance interest rate has been significantly reduced.
□ It is worth noting that bond funds are invested in key areas, in accordance with the principle of "funds follow the project", adhere to the use of special bonds for public welfare projects with a certain income, and focus on supporting the seven key areas and "transport infrastructure" determined by the State Council. Major projects such as "two new and one heavy", the transformation of old communities in cities and towns, and the construction of public health facilities.
Recently, the Ministry of Finance released data showing that as of the end of September, local government bonds had issued a total of 5.6789 trillion yuan, of which new bonds were 434.5 billion yuan and refinancing bonds were 1.344.4 billion yuan.
"Since the beginning of this year, the smooth issuance of local government bonds is an important manifestation of a more proactive fiscal policy. It has played an important role in doing the work of'six stability' and fulfilling the tasks of'six guarantees'. The issuance work has been promoted efficiently and benefited Based on market recognition and reasonable control of the issuance rhythm. Next, accelerating the progress of capital expenditures will become the focus of work." said He Daixin, deputy director of the Finance Research Office of the Chinese Academy of Social Sciences Institute of Financial Strategy.
Data shows that as of the end of September, 91% of the annual issuance plan (4,730 billion yuan) of new bonds was completed, of which 939.3 billion yuan was issued for general bonds and 95.8% of the annual plan (980 billion yuan) was completed; the issuance of special bonds was 3,655.2 billion yuan. Yuan, 89.7% of the annual plan (3,750 billion yuan) was completed, and 95% of the allocated quota (3,550 billion yuan) was completed.
This year, the scale of local bond issuance has increased significantly and the pace of issuance has been optimized.
In the first three quarters, the issuance of local government bonds reached 5.6789 trillion yuan, a year-on-year increase of 1.4967 billion yuan, an increase of 35.8%, of which new special bonds increased by 1.2355 billion yuan, an increase of 58%.
In order to achieve early issuance and early use, the issuance will be launched immediately after New Year's Day this year, 20 days earlier than 2019.
On the basis of implementing the relevant requirements for accelerating the issuance of local government bonds, the Ministry of Finance rationally coordinated the management of the issuance of government bonds and local bonds, guided the local governments to formulate a reasonable issuance plan, optimized the pace of bond issuance, and avoided the centralized issuance of local government bonds from putting greater pressure on the market.
At the same time, the issuance period has been extended and the issuance interest rate has been significantly reduced.
In the first three quarters, the average issuance period of local bonds was 15 years, an increase of 5 years compared to the same period last year. The maturity of the bonds was more matched with the maturity of the project, which better met the financing needs of long-term projects such as transportation and water conservancy.
In the first three quarters, the average issuance rate of local government bonds was 3.38%, a year-on-year decrease of 8 basis points, effectively reducing local government financing costs.
It is worth noting that bond funds are invested in key areas to effectively promote economic and social development.
In accordance with the principle of “funds follow the project”, we insist on using special bonds for public welfare projects with certain income, and focus on supporting the seven key areas of transportation infrastructure identified by the State Council and the “two new and one heavy”, urban and old community reconstruction, and public Major projects such as the construction of sanitation facilities.
Allowing the proportion of newly-added special bonds to be used in major projects' capital will increase from 20% to 25%, which will help to better leverage social capital and give full play to the positive effects of special bonds in stabilizing investment, expanding domestic demand, and making up for shortcomings.
In addition, the secondary market transaction volume has increased and liquidity has further improved.
In the first three quarters, the transaction volume of local government bonds reached 12 trillion yuan, a year-on-year increase of 4.4 trillion yuan; the turnover rate (spot bond transaction volume/total custody) was 0.47 times, an increase of 0.11 times year-on-year; the scale of pledged repo was 16.9 Trillion yuan, an increase of 2.3 trillion yuan year-on-year.
He Daixin believes that the average length of issuance of various new government bonds this year has increased significantly, and the cost of issuance is also significantly lower than the issuance interest rate in 2019.
The increase in the number of years and the decrease in interest rates will help ease the pressure on debt service, reduce financing costs, and use bond funds more flexibly for government investment projects, and promote shortcomings and stable investment.
The Ministry of Finance requires that it is necessary to supervise and speed up the use of special bond funds to form a physical workload as soon as possible, but also to ensure the quality of the project, improve the performance of bond funds, and never spend money randomly.
"The new special bond funds have optimized the investment direction, and some projects with good capital flows have been effectively supported by bond funds. Some public projects that urgently need capital injection will be significantly improved with the support of special bond funds." He Daixin said.
The reporter was informed that in this year’s local bond issuance work, affected by the new crown pneumonia epidemic, most provinces were unable to arrange personnel to conduct on-site bond issuance operations. Facing the problems that bonds could not be issued on time and financial financing was not in place, the Ministry of Finance took the initiative to act for local governments. On-site operation of debt issuance.
From January to September, the Ministry of Finance carried out 133 on-site bond issuance operations in 34 regions except Beijing, Shanghai, and Shenzhen, involving 2252.5 billion yuan of bonds.
In addition, in August, the Ministry of Finance instructed Guangdong and Zhejiang to issue 2.33 billion yuan of local bonds through the counter of commercial banks, which was the first counter issue after the outbreak of the new crown pneumonia.
Individual investors actively subscribed, further broadening the channels for local bond issuance and enriching the investor base.
The relevant person in charge of the Ministry of Finance stated that the next step will be to resolutely implement relevant decisions and deployments, accelerate the issuance and use of local bonds, ensure that the issuance of new special bonds is completed by the end of October, and strive to complete the annual economic and social development goals and tasks.
Zeng Jinhua