The management of the urban investment list system is an important measure to effectively prevent the risk of local debt, and the urban investment list not only provides the basis for analyzing the local investment and financing platform, but also helps to strengthen supervision. Especially in the context of the "package of bonds" at this stage, the list of urban investment companies has important reference significance for the future development path of ** urban investment companies. This paper systematically sorts out the lists of various types of urban investment, and analyzes the relationship between the lists on this basis for investors' reference.
1. List of local ** financing platforms of the China Banking Regulatory Commission
In order to effectively prevent the risk of local ** debt, since 2010, ** has gradually strengthened the clean-up and regulation of financing platform companies, and implemented the list management of local ** financing platforms. According to the Notice on Issues Concerning Strengthening the Management of Local ** Financing Platform Companies (Guo Fa 2010 No. 19)[1], the (former) China Banking Regulatory Commission is required to strictly manage the credit of local ** financing platforms. Therefore,Since the third quarter of 2010, the China Banking Regulatory Commission (CBRC) has compiled a list of local financing platforms, and has dynamically updated the list every quarter since then. Later, due to the difficulty of the list system to cover the newly established financing platforms in real time, there were still cases of local policies borrowing financing through off-list financing platforms, and the (former) CBRC did not update the list of financing platforms after the second quarter of 2019.
Since then, various first-class institutions have issued several documents to gradually refine the classification policy of financing platforms and build a list-based information management system. Guo Fa 2010 No. 19 divides financing platform companies into three categories: financing platforms that undertake public welfare project financing tasks and mainly rely on fiscal funds to repay debts, and public welfare project financing tasks with stable operating income and mainly rely on their own income to repay debts and undertake non-public welfare project financing tasks. In 2010, the (former) China Banking Regulatory Commission (CBRC) issued the Notice on the Inventory of Loans of Local ** Financing Platforms (CBRC No. 244 2010) [2], which classifies platform loans into risk categories according to the ratio of the borrower's own cash flow covering the principal and interest of all debts to be repaid, and according to the criteria of "full coverage, basic coverage, semi-coverage, and no coverage". The risk of a financing platform with a ratio of more than 100% of the borrower's own cash flow to the principal and interest of all debts payable is characterized as full coverage, with basic coverage between 70% and 100%, semi-coverage between 30% and 70%, and no coverage below 30%.
In 2011, the Notice on Effectively Doing a Good Job in the Risk Supervision of Loans of Local Financing Platforms in 2011 (Yin Jian Fa 2011 No. 34) [3] further improved the information management system of the list system, and subdivided customers into platform customers and rectified them into general corporate customers for separate managementPlatform customers can add new loans if they meet certain conditions, and loans that have been rectified into general companies can be loaned in accordance with the principle of commercial operation, and loans may not be issued to financing platforms other than the list system.
Compared with the list of local ** financing platforms of the CBRC in the first quarter of 2012 and the second quarter of 2019, the number of financing entities has increased from 10,622 to 11,737, and the proportion of entities with a risk level of "full coverage" has also increased significantly, from 6878% to 8033%, the increase in the proportion of financing platforms with lower debt repayment risk also indicates that the work of cleaning up and standardizing the best financing platforms has achieved initial results. In terms of provinces, according to the latest list of the China Banking Regulatory Commission, Zhejiang Province has the largest number of financing platforms, followed by Sichuan Province, which has increased from 709 in 2012 to 803 in 2019, and Jiangxi Province has the highest proportion of financing platforms with full coverage of risk qualification, at 9840%。
2. List of withdrawal from the platform
Since 2010, the company has begun to increase the supervision of the financing platform, and since then, some companies have announced their withdrawal from the financing platform. The withdrawal of urban investment companies from the platform can be roughly divided into three categories: first, according to the State Development Document No. 19 of 2010, the withdrawal from the list of local ** financing platforms of the CBRC;The second is to withdraw from the list of the Ministry of Finance platform or the 2013 national ** debt list of the National Audit Office in combination with the Guo Fa 2014 No. 43 document;The third is to refer to the Guo Fa 2021 No. 5 document, emphasizing that it does not involve ** hidden debts, and divest ** financing functions and withdraw from the list of financing platforms. Among them, the largest number of entities withdrew from the CBRC's local ** financing platform, and the early (former) CBRC classified customers as general corporate customers, which also refers to the entities withdrawing from the platform here. Since 2023, the new withdrawal platform entities have mainly withdrawn from the third type of list, and emphasized that they do not involve hidden debts.
As of December 31, 2023, a total of 2,151 entities have issued "withdrawal from platforms" announcements, and the number of financing entities withdrawing from platforms will reach a peak of 823 and 677 in 2015 and 2023, respectively. Among them, the peak in 2015 may be related to the fact that Guo Fa 2014 No. 43 clearly proposes to divest the financing function of the platform company, mainly withdrawing from the platform list of the Ministry of Finance;The surge in the number of delisted platforms in 2023 may be related to the policy orientation of preventing and resolving local ** hidden debts, mainly withdrawing from the above third category list. By province,Jiangsu Province, Zhejiang Province and Shandong Province disclosed a large number of entities for withdrawal, accounting for about 4668%, Jiangsu Province disclosed the largest number of entities that withdrew from the platform, reaching 596.
1] Material**: Notice on Issues Concerning Strengthening the Management of Local ** Financing Platform Companies
2] Material**: Notice on the Inventory of Loans of Local Financing Platforms
3] Material**: Notice on Effectively Doing a Good Job in the Risk Supervision of Loans of Local Financing Platforms in 2011
The list of market-oriented business entities is divided into two categories: the list of market-oriented business entities and the list of non-market-oriented business entities. Therefore, this article reviews the prospectuses of bond issuers in the interbank market from November 21, 2023 to December 31, 2023, and distinguishes them into those disclosed as market-oriented business entities and those that are not disclosed as market-oriented business entities according to the presence of the word "market-oriented business entity", forming two types of lists, and further analyzing their distribution characteristics and differences in the use of raised funds.
1. List of market-oriented business entities
Since November 2023, some companies have successively disclosed that they are market-oriented business entities when issuing bonds in the interbank market, and they need to issue a letter to confirm. **It is necessary to confirm that the bond issuer is a market-oriented business entity, and promise that the business, assets and the use of funds raised from the newly issued bonds related to the local government will not involve false resolution or new local hidden debts. Taking Jiangsu Yancheng Port Holding Group as an example, it is mentioned in the prospectus that its accounts receivable have the main receivables from the ** department, or it is necessary to issue a letter stating that it is a market-oriented business entity to confirm that there is no situation of borrowing debts for the local **. The disclosure in the announcement may be for two purposes, one is to convey the signal of "market-oriented business entity" to market investors, indicating that the company has transformed into market-oriented operation and is strictly isolated from ** credit; The second is to meet the needs of supervision and realize its own demand for bond issuance.
Through the combing of the prospectus of bond issuers in the interbank market from November 21, 2023 to December 31, 2023Among the 576 entities, a total of 72 urban investment companies were found to have the words "market-oriented business entity" in the announcement, and 60 of them emphasized that "the issuer is a market-oriented business entity" in the opening statement and commitment. By province,A total of 19 provinces were involved in companies claiming to be market-oriented business entities, of which Shandong Province disclosed the largest number of companies as market-oriented business entities, with 17 companies, followed by Zhejiang Province. From the perspective of administrative level,Among the market-oriented business entities, prefecture-level city entities accounted for the highest proportion, at 6667%, followed by district and county-level entities.
2. List of non-market-oriented business entities
This paper sorts out the bond issuers in the interbank bond market from November 21, 2023 to December 31, 2023, and 504 of the 576 entities have not disclosed that they are market-oriented entities, and non-market-oriented entities can be further divided into potential listed entities and potential industrial entities. In particular, in some cities, there are situations where the disclosure is a market-oriented business entity, a potential list entity, and a potential industrial entity. In addition, in Beijing, Fuzhou, Guangzhou, Hefei, Jinan, Jining, Jingmen and Zhengzhou, there are certain types of non-market-oriented business entities and those disclosed as market-oriented business entities.
Since the entities in the list do not need to issue a letter to confirm, taking Jingmen City Construction Investment as an example, the purpose of the raised funds is only to borrow new to repay the old, which is suspected to be the subject in the list. For urban investment companies that have not been disclosed as market-oriented business entities, the funds raised by potential industrial entities are used more broadly. There are 96 companies that issue bonds to raise funds to supplement liquidity funds or invest in project construction, while the use of funds raised by market-oriented business entities is basically limited to borrowing new ones to repay old ones and repay interest-bearing debts. In addition, the potential industrial entities are mainly transportation investment entities.
1. List of bond-issuing urban investments
Since the bonds issued by urban investment entities are important investment targets, the market usually pays more attention to urban investment bond issuersHere, we take the entity of urban investment bond issuance under the wind caliber as an example. Because it only counts bond issuers, the scope of statistics is narrower than the CBRC's list of local ** financing platforms. As of December 31, 2023, there are 3,585 urban investment companies in the Wind Urban Investment list.
Overall, Jiangsu Province and Zhejiang Province have the largest number of urban investment bond issuers, with 672 and 449 issuers, respectively. There is a positive correlation between the number of urban investment bond issuers and the amount of existing bonds, among which the amount of existing bonds in Liaoning Province and Guizhou Province is relatively low, while the scale of bond issuance in Tianjin is relatively high. In terms of administrative level, there are more urban investment entities at the district and county level and prefecture and city levels, and the sum of the two accounts for 93 of the total number of urban investment95%。In provinces with a large number of urban investment entities, district and county-level urban investment entities tend to dominate, while Ningxia, Heilongjiang and other regions have significantly more urban investment bond issuers at the prefectural and county levels than at the district and county levels.
2. Break through the list of "borrowing the new to repay the old".
At this stage, the use of bonds issued by enterprises on the list is subject to certain restrictions, and it is limited to borrowing new money to repay old ones, which can be reasonably inferredNewly issued association bonds, corporate bonds and corporate bonds may be excluded from the list if the purpose of the funds raised includes the use of supplementary liquidity funds or project construction, and there are no strict restrictions on bond issuance. By sorting out the various types of bonds newly issued by urban investment entities from October 1, 2023 to December 31, 2023, 67 bonds issued by 63 companies were raised for supplementary liquidity funds or project construction.
In terms of bond types,The new bonds issued by urban investment entities include 13 corporate bonds, 27 corporate bonds and 27 association bonds. In terms of provinces, Guangdong, Shandong and Zhejiang provinces have the largest number of bonds that break through the use of "borrowing new to repay the old", while Shandong and Henan provinces have the largest number of bond issuances. In addition, 11 provinces, including Shandong and Zhejiang, have recently been involved in the financing of new corporate bonds issued by urban investment entities.
3. List of mother-child urban investment
At present, the phenomenon of joint bond issuance by mother-child urban investment companies is relatively common, and due to the influence of the urban investment list, the use of the funds raised by the mother-child urban investment bonds may be restricted from each other, and there is a certain connection. In October 2023, the Guidelines for the Application of the Review Rules for the Issuance and Listing of Corporate Bonds on the Shanghai ** Exchange No. 3 – Key Matters for Review[1] pointed out that the impact on the solvency of the issuer should be disclosed in light of the interest-bearing debts of the parent company and its control over the core subsidiary, i.e., the relationship between the parent and the subsidiary. Similarly, for urban investment companies that break through the "borrowing new to repay the old", if the use of the funds raised by the parent and subsidiary of the urban investment company in the list involves supplementing liquidity funds or investing in project construction, it may also affect whether the corresponding parent and subsidiary are on the list, and thus affect the use of the raised funds. Assuming that bonds are issued on the exchange, whether the parent company is on the list will affect whether the subsidiary is on the list and vice versa; In the issuance of bonds by the dealers association, whether the parent company is on the list will also affect whether the subsidiary is on the list, but vice versa.
By sorting out the new bonds issued by the mother-child urban investment company from October 1, 2023 to December 31, 2023, at least one party has raised funds for the purpose of supplementing liquidity funds and investing in project constructionIt is found that among the 63 breakthrough "borrowing new to repay the old" urban investment entities, 14 have recently issued bonds of the parent city investment or sub-urban investment, of which 10 parent (child) urban investment companies have the corresponding breakthrough "borrowing new to repay the old" entities, so it can be deduced that they do not belong to the list of urban investment. There are few cases in which both mother and child bond issuance involve supplementary liquidity funds and investment in project construction, and only one pair of mother and child urban investment companies (Shandong High-speed Group***Shandong High-speed Co., Ltd.***) have the above situation, and most of the parent and child urban investment companies are involved in supplementing liquidity funds and investing in project construction while the other party is not involved. In particular, the funds raised by six urban investment parent companies are used not only for themselves, but also for their subsidiaries to repay interest-bearing debts or replenish liquidity.
1] Profile**:
The main logic is roughly divided into two contexts: addition and subtraction, one is to combine the list of local ** financing platforms of the CBRC on the policy side and the list of bond-issuing urban investment on the market side, which complement each other and are jointly used as an additional item, and the other is to deduct the urban investment entities that have successfully transformed such as exiting the financing platform and disclosing them as market-oriented business entities. Except for the CBRC's list of local ** financing platforms, the rest of the lists involved in this article are dynamically adjusted with market changes.
The additive logic can be divided into two categories, one is the 12,479 financing platforms in the CBRC's list of local financing platforms from the first quarter of 2012 to the second quarter of 2019, with a total of 7,625 after excluding the cancelled and revoked enterprises and institutions; The second category is the 3,585 urban investment bond issuers covered by the Wind Urban Investment List as of December 31, 2023, which partially overlaps with the list of financing platforms, but the latter has only been updated to June 30, 2019.
The subtraction logic involves the following four types of lists, specifically, the de-platform entities themselves are stripped of their financing functions, so 2151 "de-platform" entities that have successfully transformed can be removed from the list, of which Jiangsu Province and Zhejiang Province have the most de-platform entities, with 183 and 102 respectively. Subsequently, considering that the 72 companies disclosed as market-oriented business entities can be regarded as self-financing market-oriented entities and removed from the existing list. Subsequently, due to the extremely restricted use of bond issuance by the enterprises on the list, the 63 urban investment entities that have recently raised funds from bond issuance to supplement liquidity funds or invest in project construction are included in the list. At the same time, taking into account the mutual transmission of the purpose of bond issuance by the parent and child urban investment companies, the list of parent and child urban investment companies corresponding to the urban investment companies that break through the "borrowing new to repay the old" is comprehensively used to obtain the corresponding list of the parent and child urban investment companies that have broken through the "borrowing new to repay the old", and the 10 urban investment entities in the parent and child urban investment companies that restrict the use of their own bond issuance due to the bonds issued by the other party involve supplementary liquidity funds or investment in project construction.
Finally, if it is a type of entity to be added or subtracted, that is, an urban investment company that has not been disclosed as a market-oriented business entity, it can be roughly divided into a potential list of entities and potential industrial entities, if it is an entity in the list, it should be included in the addition method, and if it is an industrial entity, it should be included in the subtraction logic, so the addition and subtraction of 504 urban investment entities that have not been disclosed as market-oriented business entities need to be analyzed on a case-by-case basis.
This paper mainly analyzes the relationship between the three types of urban investment lists, involving eight categories: the CBRC's local ** financing list, the list of withdrawn platforms, the list of market-oriented business entities, the list of non-market-oriented business entities, the list of bond-issuing urban investment, the list of breakthrough "borrowing new to repay the old", the list of mother-child urban investment and the list of summary urban investment.
For the list of local financing platforms, this paper analyzes the classification methods and related main policies of financing platforms, and counts the urban investment entities involved in the list of financing platforms and the list of withdrawal platforms of the CBRC. Since 2010, various leading institutions have issued several documents to strengthen the clean-up and regulation of financing platforms, and build a list management system. According to the latest list of the CBRC, there are 11,737 financing entities, and the proportion of entities with a risk level of "full coverage" has increased significantly, reaching 8033%。Under the policy guidance of cleaning up and standardizing financing platforms, as of December 31, 2023, a total of 2,151 financing entities have issued "withdrawal from platforms" announcements, mainly referring to the withdrawal from the CBRC's list of local ** financing platforms.
Due to the increasing number of urban investment companies that disclose themselves as market-oriented business entities, this article also sorts out the prospectuses of bond issuers in the interbank market from November 21, 2023 to December 31, 2023, and divides them into two categories: the list of market-oriented business entities and the list of non-market-oriented business entities. From November 21, 2023 to December 31, 2023, a total of 72 companies disclosed that they were market-oriented business entities, of which Shandong Province disclosed the largest number of companies as market-oriented business entities, and prefecture-level city entities disclosed the highest proportion of market-oriented business entities. However, the 504 new bond issuers did not disclose that they were market-oriented business entities, and their raised funds were used more widely than those disclosed as market-oriented business entities.
As of December 31, 2023, the list of wind urban investment companies covers a total of 3,585 urban investment companies. Among them, Jiangsu Province and Zhejiang Province have the largest number of urban investment bond issuers, with 672 and 449 respectively. From October to December 2023, there were 67 bonds in the newly issued bonds that involved supplementary liquidity funds or project construction, among which Guangdong, Shandong and Zhejiang provinces had the largest number of bonds that broke through the "borrowing new to repay the old" purpose.
Through the analysis of the relationship between the above lists, the list of local ** financing platforms and the list of bond-issuing urban investment of the CBRC are taken as additions, while the list of withdrawn platforms, the list of market-oriented business entities, the list of urban investment entities that break through the "borrowing new to repay the old" and the list of mother-child urban investment are deducted items, and the logic of addition and subtraction of the list of non-market-oriented business entities needs to vary according to the specific situation.
**From: Yujian Bond Market, Author: Xiao Yu Lai Yiru