China Securities Journal reporter learned on the 13th from a number of brokerages that the Exchange had recently instructed to relax the reporting conditions for issuing corporate bonds by local financing platforms. Issuance of corporate bonds for the purpose of borrowing new and old, and relaxing the upper limit of 50% of government revenue. The Exchange requires that the use of the raised funds is limited to the repayment of corporate bonds of the Exchange.
Market sources revealed: local financing platform relaxes the conditions for borrowing new and old debt
Industry insiders pointed out that the relaxation of Nantong registered companies by borrowing new and old debt issuance reporting conditions will help to open up urban investment and financing channels and help ease the short-term debt repayment pressure of financing platforms. This move is good news for urban investment bond investment, and the future yield of urban investment bonds may fall further. The relaxation may partially squeeze the trust and credit business of the trust company, but it will help the non-standard financing costs of local financing platforms to fall and reduce the risks of the existing projects of the trust and credit business.
Smooth access to urban investment and financing channels
A securities firm in South China revealed that the above-mentioned window guidance of the exchange has not been issued with any documents for the time being, but only verbal guidance.
"At present, there are no operating rules. However, according to the requirements, the time when the debt issuance document is reported to the exchange for the purpose of borrowing new and old money, it must be that the debt to be replaced has not been repaid. Issuing corporate bonds, when reporting new debts, the old debts still have to survive. You can't just pay for them yourself, and then issue new debts in this name. "Nantong, a securities company registered in the north, registered the company Bond underwriters said.
The easing of the reporting conditions for issuing debts by borrowing new and old debts will help to open channels for urban investment and financing. Li Wei (pseudonym), a bond investor in a state-owned bank, told the China Securities Journal that the purpose of the exchange's move is to ease the short-term debt repayment pressure of the financing platform and trade time for space.
It is understood that the "50% upper limit of government revenue ratio" for the guidance of the new debt repayment window has been used to be an important "red line" that the exchange has adhered to when reviewing the issuance of corporate bonds by local financing platforms. .
The Exchange has previously stated (September 2, 2016) that for companies directly or indirectly controlled by local governments and their departments to apply for the issuance of corporate bonds, the following standards are temporarily implemented: First, the issuer is listed on the local government financing platform of the China Banking Regulatory Commission Listed companies may not issue corporate bonds. Second, if the issuer belongs to the withdrawal platform category or is involved in land development, government project construction, etc., its revenue and cash flow from its local government in the reporting period shall not exceed 50%. , Except for the use of raised funds for provincial affordable housing. However, in the practice of audit, it was found that some issuers had irregular corporate governance and no distinction between government and enterprises. By adjusting accounting treatment to avoid issuance conditions, it was not conducive to the actual prevention and resolution of local government debt risks. According to the unified deployment of the regulatory authorities, after repeated demonstrations and prudent evaluations, the exchange has revised the selection criteria for local financing platforms, specifically: First, the "double 50%" is adjusted to "single 50%", that is, during the reporting period The issuer's income from the local government must not exceed 50%, and the cash flow ratio indicator is abolished; the second is to adjust the calculation method of the indicator. In order to improve the rationality of the indicator, the issuer calculates the proportion of government revenue. In addition to the arithmetic average of the proportion of government revenue in each reporting period, it can also adopt the “weighted average method”.
Urban investment bond yields are expected to fall
"The relaxation of the new and old debt issuance reporting conditions is positive news for urban investment bonds." Li Wei said that the future urban investment bond yields and credit spreads may fall.
In fact, since July 2018, higher-rated urban investment bond yields have been declining. Wind data shows that on March 13, 2019, the 5-year ChinaBond City bond yield to maturity (AA +) was 4.31%, a decrease of 0.92 percentage points from 5.23% on July 2, 2018.
Under the risk aversion, urban investment bonds are still one of the investment types favored by institutions. "Now the more qualified urban investment bonds in the market are more sought-after. For example, the city-level urban investment bonds have a subscription multiple of 4, 5 times, and the district and county levels have about 2 times. The subscription multiples are relatively high." Li Wei introduced.
Jiang Chao, chief economist of Haitong Securities, said in a research report that the value of investment in urban investment bonds will be prominent in the future, and the risk aversion will promote the price of urban investment bonds. On the one hand, the margin of debt supervision of financing platforms was relaxed; on the other hand, due to the default of private corporate bonds, the market's evasion mood was re-fermented, and the risk-averse value of urban investment bonds became prominent again.
Government-trust cooperation becomes standardized
In addition to issuing bonds, non-standard financing is also an important source of funding for local government financing platforms. "The relaxation of the conditions for urban investment to borrow new and old debt, on the one hand, actually expanded the platform companies' financing capacity and increased the funding channels, and the trust company's previous political letter projects were relatively safe; on the other hand, the new political letter business landed It will be affected. "A trust source said that this has advantages and disadvantages for the trust's political letter business.
内部整顿比较严格，没有扩大政信业务，政信业务规模和占比持续下滑。” Industry insiders frankly said: "At present, the government platform business tends to do one-year projects. The main purpose is to use the turnover of existing debt. Not many new projects are introduced." Strict, the government letter business has not been expanded, and the scale and proportion of the government letter business has continued to decline. "