Author丨Yang Zhijin.
Editor丨Bao Fangming.
**An executive meeting was held on February 23 to deploy further efforts to prevent and resolve local debt risks. The meeting proposed that it is necessary to adhere to reform and innovation, strengthen supporting policy support, persistently advance the tackling, and further promote the implementation of the package of debt schemes.
Supporting policies have become the focus of market attention. Up to now, 31 provinces have disclosed the work report and the report on the implementation of the 2023 budget and the draft budget for 2024 (hereinafter referred to as the "budget report"), which together constitute important official materials for observing the progress and plan of local debt resolution in each province.
According to the reporter, many provinces will formulate a "1+N" debt plan in 2023, of which 1 refers to the total debt plan and N refers to the debt sub-plan, but the sub-plans in different places are different and the number is also different. Looking forward to 2024, many provinces have proposed to continue to promote the implementation of the debt plan, and at the same time fully strive for the best debt policy. In addition, a number of provinces have indicated that they will strengthen the management of financing platforms and reduce the number of financing platforms, and it is expected that the urban investment industry will continue to usher in strong supervision.
Ningxia has the largest debt strength and quota in the past years
Local government bonds mainly include statutory debts and hidden debts. Among them, statutory debts refer to debts that are liable for repayment. The implicit debt refers to the debt borrowed by the local government outside the statutory debt limit, either directly or promised to repay it with financial funds and illegally providing guarantees.
In October 2018, the regulator completed the mapping of hidden debts. For the treatment of hidden debts, the regulator proposes two major directions: on the one hand, resolutely curb the increment, and on the other hand, actively and prudently resolve the stock. Many localities have announced implicit debt resolution plans, most of which require that the implicit debt be resolved within 5-10 years, and each year there is a corresponding debt resolution task.
According to the reporter, in 2023, Tianjin, Inner Mongolia, Jilin, Qinghai, Ningxia, Henan, and Hunan will complete or exceed the task of resolving hidden debts. For example, Hunan Province said that it seized the opportunity to implement a package of debt plan measures, implemented "precision bomb disposal" for high-risk areas and high-risk debts, and overfulfilled the task of resolving hidden debts.
Ningxia said that the region has overfulfilled the task of digesting hidden debts, all mature platform bonds and non-standard debts have been repaid as scheduled, the scale and debt ratio of the autonomous region have decreased, the risk level of the region's full-caliber debt has dropped by one level, the number of high-risk areas has further declined, and the strength and amount of debt have been the largest in the past.
Because in 2018, when the plan was submitted to each year, if the scale of a certain annualized debt exceeded the scale of the planned resolution, it was an overfulfilled task. A financial system debt regulator said.
Special refinancing is an important way to resolve hidden debts. In October last year, the issuance of special refinancing bonds was restarted to replace arrears, non-standard and urban investment bonds included in the implicit debt, and 14 trillion yuan. After the issuance of special refinancing bonds to replace implicit debts, the increase in the debt balance and the decrease in the implicit debt balance are important measures to resolve the implicit debt. Qinghai Province said that it has successfully completed the task of turning debt into debt throughout the year through channels such as increasing revenue and reducing expenditure, revitalizing assets, adjusting the use of special bonds, and issuing special refinancing bonds.
Inner Mongolia disclosed that in order to support the implementation of the package of debt in our region, the Ministry of Finance issued a refinancing bond quota of 106.7 billion yuan in Inner Mongolia to support the repayment of existing debts, optimize the debt maturity structure, reduce the debt interest burden, smooth the pressure of repayment of principal and interest on mature debts, and exchange time for space, which provides strong support for the debt work in our region. Judging from public information, Inner Mongolia's 106.7 billion special refinancing bonds have been issued.
A person from the debt office of a district and county in a southern province said that compared with the establishment of the debt monitoring system in August 2018, although the hidden debt did not grow, the concerned debt and operating debt grew rapidly. In fact, the platform company repays the principal and interest of the implicit debt in the name of the new operating debt, but it is difficult for the operating debt to meet the conditions required by the regulator, that is, the operating income corresponding to the operating project, the operating assets and the operating income covering the principal and interest of the debt.
Therefore, in the supervision of local bonds, not only hidden debts should be included, but also operating debts should also be included in the scope of supervision, which has been practiced in some places. Jiangsu Province said that in 2023, it will take the lead in developing and launching a comprehensive local debt supervision system in the country, and promote the full-caliber management of ** debt, hidden debt and financing platform operating debt in an integrated manner, forming a closed loop of work.
Formulate a 1+n debt plan
The meeting of the Political Bureau of the Communist Party of China held on July 24 last year proposed that it is necessary to effectively prevent and resolve local debt risks and formulate and implement a package of debt plans. Judging from the ** work report and budget report, many provinces have formulated a "1+N" debt plan last year, of which 1 refers to the total debt plan and N refers to the debt sub-plan, but the sub-plans in different places are different and the number is also different.
Jiangxi Province said that it has introduced a "1+9" plan to prevent and resolve local debt risks and maintain the only province in the country with zero bond default. Gansu Province said that it has formulated and implemented a "1+10" plan to prevent and resolve local debt risks, and eased 1048 debts of financing platforms400 million yuan. Inner Mongolia said that it will adhere to the "reduction of deposits and curb the increase" to resolve the first debt and implement the "1+8" debt plan.
When reviewing the work in 2023, the Tianjin budget report said that the prevention and resolution of debt risks will be regarded as the "No. 1 project" and "No. 1 campaign", adjust the establishment of the city's leading group for resolving first-class debts, and simultaneously set up special work teams at the city and district levels, further improve the work pattern of the city taking overall responsibility and all districts making every effort to reduce debts, formulate and implement the "1+10" full-caliber debt resolution work plan, coordinate the city's capital resources to reduce debts and reduce risks, and successfully complete the annual debt reduction goals and tasks.
The Shaanxi Provincial Budget Report stated that the organization will find out the base of the province's debt, formulate the overall plan for the province's debt, and special plans for cleaning up arrears, resolving the risks of local small and medium-sized banks, and preventing and resolving the debt risks of financing platform companies.
According to the above-mentioned financial system, "1" refers to the overall plan for the resolution of local debt risks, and "n" includes the resolution plan for local ** debts and hidden debts, the repayment plan for arrears of enterprises, the debt resolution and transformation and development plan of the financing platform, the base of state-owned assets and the debt repayment plan for asset revitalization, and the risk resolution plan for small and medium-sized banks, but the sub-plans will be different in different places, and the responsible departments will also be different.
According to the reporter's understanding, the financial department is mainly responsible for the resolution of local debts and hidden debts, the debt resolution of arrears of enterprises is mainly responsible for the Ministry of Industry and Information Technology, and the debt resolution of financing platforms is mainly responsible for the financial regulatory departments and state-owned assets departments. Inner Mongolia disclosed that the Department of Finance took the lead, together with the departments of financial supervision, industry and information technology, and natural resources, to form a special task force for the work of chemical debt, and specifically promoted the work of chemical debt.
12 high-risk investment projects must also be developed to control the first investment project. In terms of project investment, Yunnan Province said that it will strictly implement the requirements of debt, effectively adjust the investment structure, firmly establish the concept of "how much money you have, how much you can do", and strictly control new investment projects. Adhere to the pressure of retention, strengthen the overall planning of fiscal expenditure, break the fixed pattern, and cancel projects with expired policies, one-time projects, projects without a first-class or provincial party committee and provincial policy basis, and projects with a low degree of matching with high-quality development.
Inner Mongolia said that it will strengthen budget constraints and investment project management, fully carry out financial affordability assessment, carry out project construction according to its ability, and strictly prohibit the construction of image projects, political performance projects and projects that may be separated from local financial resources. Strictly control new investment projects, free up more financial resources, and support the prevention and resolution of local debt risks.
Promote the implementation of the debt plan
In the 2024 chemical debt plan, many provinces should propose to promote the implementation of the chemical debt plan. For example, Shanxi Province proposed to promote the working mechanism of "the province is responsible for the overall responsibility, and the cities and counties do their best to reduce debt", implement the "one province, one policy" Shanxi debt plan, and ensure the implementation of various debt reduction measures.
Striving for the best support policy is also the focus of attention in various places. For example, Hunan Province said that it will pay close attention to the policy trends, strengthen supervision, assessment, monitoring and early warning, encourage and urge cities and counties to implement the task of turning debts, coordinate financial institutions to support debts, optimize local debt structure, and reduce debt interest costs. Heilongjiang said that it will make full use of the national debt policy.
*The support policies mainly include special refinancing bond swaps and bank loan swaps. Historically, the special refinancing bond limit** has been subject to the balance limit. According to data from the Ministry of Finance, the national local ** debt limit in 2023 is 421674300 million yuan, as of the end of December 2023, the balance of local ** debt in the country is 407373 billion yuan, and the space for the limit and balance is 143 trillion yuan. Due to the remarkable results of special refinancing bonds, the market expects that there is a high probability that new special refinancing bonds will continue to be approved this year.
In the fourth quarter of last year, the financial system, especially the banks, also started to support the resolution of local debts, and the participation of banks in the resolution of local debts can be roughly divided into two situations: one is to extend the loan period of the bank and reduce the interest rate; The second is debt swapping. According to this reporter's understanding, the conditions for banks to replace existing debts are relatively strict. In the current financial debt swap, banks require the projects corresponding to the original debt to be financially sustainable or the local government to provide collateral, while the local government has few such projects and assets. Of course, financialized bonds themselves are market-oriented behaviors, and it is understandable for banks to demand this, but objectively lead to the slow progress of financialized bonds.
There is also a local deal with financialized debt. Tianjin proposes to promote the turnover of implicit debts and operating debts of financing platforms in accordance with laws and regulations, further optimize the cost term structure, and reduce the interest burden. Sichuan Province proposes to strengthen the management of the first debt budget, make good use of the policy of financial support for debt, effectively control debt risks in a hierarchical and classified manner, actively innovate debt methods, expand debt paths, and resolve existing debts in an orderly manner.
Recently, some new debt models have emerged. Guizhou Hongyingda Construction Engineering Management Co., Ltd. recently issued a non-public offering of 1.8 billion yuan "24 Hongjian 01", with a final coupon rate of 480% with a subscription multiple of 26 times. The funds raised by the bonds are intended to be used to repay the principal of the private placement bonds "18 Xixiu 01" and 19 Xixiu 01 issued by Qiancheng Industrial Co., Ltd., Xixiu District, Anshun City.
Qiancheng Industrial Co., Ltd., Xixiu District, Anshun City, has no equity relationship with Guizhou Hongyingda Construction Engineering Management Co., Ltd., but the former has poor qualifications and has a number of information on dishonest persons subject to execution, and the latter has issued bonds in the market for the first time, thus creating a case of a better qualified financing platform issuing bonds to repay the principal of bonds due to a weakly qualified financing platform, and the market expects that such cases will increase in the future.
In addition, a number of provinces said that they would strengthen the management of financing platform companies and reduce the number of financing platforms. Inner Mongolia said that it is necessary to gradually reduce the stock debt of financing platforms, significantly reduce the number of platforms, and establish a long-term mechanism for platform management; Anhui Province also said that in accordance with the unified deployment, it will carry out comprehensive governance of local first-class financing platform companies, promote classified clean-up, reform and transformation, and strengthen local debt monitoring and supervision; Ningxia said that it will strictly manage financing platforms, resolutely put an end to illegal borrowing by financing platforms, reduce the number of financing platforms, and accelerate the transformation and development of financing platforms.
According to the reporter, since 2017, Chongqing, Hunan, Shaanxi, Shandong, Gansu and other provinces have issued financing platform transformation plans, most of which require the number of municipal-level platform companies to be controlled within 3 and county-level platform companies to be controlled within 2.
sfc
Editor: Jiang Peipei, intern: Song Jiayao.
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