Local government bonds, this hot topic, which has kept countless investors and *** awake at night, ushered in a "cool breeze" in January 2024. The data is not deceiving, according to incomplete statistics, the scale of local bond issuance in January this year was 3844496.6 billion yuan, compared with 643.5 billion yuan in the same period last year, directly cut in half! What is the truth behind this change?
First of all, it is important to understand the two main components of local government bonds: new bonds and refinancing bonds. In January this year, new bonds accounted for 4561%, and refinancing bonds accounted for 5439%。To put it bluntly, while the local government is borrowing new to repay the old, the new debt has been greatly reduced. Isn't this phenomenon exactly what we are looking forward to "debt decompression"?
Looking at the geographical distribution, Guangdong, Shandong and Sichuan provinces ranked among the top three in terms of bond issuance. Guangdong, in particular, leads the country by more than a quarter, which undoubtedly reflects the contest of local economic strength. At the same time, however, it should also be noted that even economically strong provinces are actively adjusting their debt structure and seeking a healthier fiscal balance.
Compared to the same period last year, new bonds fell by a staggering 71 percent in January98%, and the total amount of local debt decreased by 40% year-on-year26%。What's even more amazing is that the issuance of refinancing bonds has increased by nearly 12 times compared to the same period last year! This makes people wonder: how did the local government reduce the new debt while also significantly increasing refinancing?
GF Research's fixed income team gave some clues: there is a gap between the scale of local bond issuance and the plans previously announced by provinces and cities, especially the issuance of new special bonds is much lower than planned. This may mean that the demand for new special bonds is not as urgent as expected, or that they are becoming more cautious and rational.
With all these changes, it is not difficult to see that the local bond market is undergoing a profound transformation. From crazy financing, to rational adjustment, to today's "cool breeze", this reflects the maturity and progress of local ** in debt management. Reducing new debt and rationally arranging refinancing is not only to deal with the first-class debt control policy, but also to consider the long-term healthy economic development.
In short, the local bond issuance data in January 2024 gives us a lot of information worth pondering. At a time when the storm is receding, we have reason to believe that China's local bond market is moving towards a healthier and more sustainable future.