In order to hedge against the downward pressure on the economy, local governments are strengthening infrastructure construction, and the issuance of new special bonds to raise funds for infrastructure construction will usher in a small upsurge.
According to agency statistics, in the first four months of this year, local governments issued about 1.35 trillion yuan of new special bonds.
This is an increase of about 1.12 trillion yuan over the same period last year, and the issuance of new special bonds this year is significantly faster than last year.
However, the new issuance of special bonds in April was only 103.8 billion yuan, a sharp drop from the previous month.
This is mainly because the pre-approved quota for new special bonds issued at the end of last year (1.46 trillion yuan) has basically been used up, and the remaining quota was issued to each province at the end of March, and it will take time for each province to allocate the remaining quota to specific cities and counties. , the Ministry of Finance requires that this work be completed by the end of April, which objectively makes the amount of new special bonds that can be issued by local governments in April less.
Since April, provinces have successively allocated new special debt quotas to cities and counties.
For example, Jiangxi Province has obtained a new special debt quota of 147.5 billion yuan this year, of which the second batch of quota is 81.1 billion yuan.
This 81.1 billion yuan of new special debt quotas, 6.32 billion yuan at the provincial level, are mainly used for government toll roads and other transportation, education, and health fields, and the remaining 74.7 billion yuan is allocated to cities and counties.
This year, the allocation of special debt quotas will no longer be "sprinkled with pepper", and will focus more on projects under construction and with sufficient preparations and conditions to start construction, so as to promote the formation of physical workload as soon as possible and give full play to the stable investment effect of special debt funds.
The Jiangxi Department of Finance stated that the allocation of new government bond funds this time also strengthens incentives and constraints, linking the allocation of debt limits to factors such as financial resources, debt risk status, progress in the use of bond funds, and resolution of existing hidden debts at the end of 2021. Incentivize cities and counties with strong debt capacity, low debt risk, fast use progress, and good progress in resolving existing hidden debts, and restrict cities and counties with weak solvency, high debt risks, slow use progress, and slow resolution of existing hidden debts .
The scale of new special bonds issued this year is about 3.65 trillion yuan, and there are still about 2.3 trillion yuan of new special bonds to be issued.
As the new special debt quota of about 2.3 trillion yuan was allocated to cities and counties in April, the market expects that there will be a small upsurge in bond issuance in May and June.
The current impact of the epidemic has exceeded expectations, and the downward pressure on the economy has increased. One of the important starting points for stabilizing growth is the expansion of infrastructure investment, which objectively requires speeding up the issuance of special bonds, raising funds for major infrastructure projects, and ensuring the implementation of projects.
Recently, the Politburo meeting of the CPC Central Committee called for comprehensive strengthening of infrastructure construction.
The Ministry of Finance has also issued a document requiring local governments to complete the issuance of most of the new special bonds this year by the end of June, and to complete the finalization of the issuance of the remaining quota in the third quarter, leaving room for the implementation of subsequent policies.
The analysis of Zhongtai Securities believes that there will be a lot of pressure on the issuance of new special bonds in May and June.
Judging from the May issuance plans of various regions, the total amount of newly disclosed special bonds currently totals 338.2 billion yuan, while the actual/early planned issuance ratio of newly added special bonds in the previous six months is about 1.5 on average. Therefore, we predict that the issuance will be issued in May. About 500 billion yuan of new special bonds will be issued, and about 850 billion yuan will be issued in June.
Xu Hongcai, Vice Minister of Finance, said in an interview recently that 3.65 trillion yuan of local government special bonds were newly added this year, and local governments acted quickly to give full play to the positive role of special bonds in expanding investment and stabilizing growth.
It is expected that the issuance of most of the new special bonds will be completed in the second quarter, and will be completed in the third quarter.