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    If the exchange relaxes and borrows new and old, which city investment will obviously benefit?

    2019-03-14 11:34:27

    Yuyan Bond Market Liu Yu Jiang Dan

    Summary

    Recently, the reporting conditions for the issuance of corporate bonds by the local financing platform of the Shanghai and Shenzhen Stock Exchange have been loosened. If you relax the single "50%" ratio limit, the overall favorable city investment, especially for the two types of city investment is obvious:

    1. City bonds issued before September 2016, but have not issued corporate bonds afterwards.Prior to September 2016, city investment from government revenues exceeding 50% could be adjusted to obtain no more than 50% of government cash inflows. However, after the issuance threshold became "single 50%", some of the city investment no longer met the conditions for issuing corporate bonds, which led to the failure to issue corporate bonds after September 16th. This time, the company re-issued corporate bonds for this type of city investment. Borrowing new and old conditions.2. The city investment due to the issuance of corporate bonds for the provincial-level affordable housing project. Although some urban investment does not meet the “double 50%” or “single 50%” regulations, the funds raised for provincial-level affordable housing projects can be exempted from this restriction, so that corporate bonds can be issued. However, in the latter stage, there may be no provincial-level affordable housing projects, and it is no longer possible to issue corporate bonds. The relaxation will be beneficial to the re-issuance of corporate bonds by such urban investment. Since it is possible to issue corporate bonds for the purpose of borrowing new loans for the debts due within 6 months, the government's income is capped at 50%. Therefore, we have calculated the situation of urban investment company bonds due and resold within 6 months, with a total scale of 109.8 billion yuan. Among them, the balance of urban investment corporate bonds issued before September 2016 was 98.6 billion yuan, involving 114 issuers; the balance of urban investment corporate bonds issued in September 2016 and later was 11.2 billion yuan, involving 21 issuers.Among the 114 urban investment issuers that issued corporate bonds before September 2016, there were 54 companies that had not issued corporate bonds in September 2016, involving 64 vouchers, with a total balance of 42.6 billion yuan. There are 11 in Jiangsu Province, 6 in Zhejiang Province, 4 in Hunan Province and 4 in Sichuan Province. These urban investment issuers will benefit from the relaxation of corporate bonds after the new and old issuance conditions. risk warning: The policy on urban investment exceeded expectations; fiscal revenue fell more than expected.

    City investment issuing company bonds to relax with new and old conditions

    Recently, the application conditions for the issuance of corporate bonds by the local financing platform of the Shanghai and Shenzhen Stock Exchanges have been loosened. For debts due within 6 months, the company’s debts will be issued for the purpose of borrowing new loans. If the original “single 50%” limit is relaxed, What kind of impact will there be?

    Prior to this, the exchange issued a bond to the city investment platform.Requirements, experienced two changes: the first time in 2015, the city investment company's standard for issuing bonds on the exchange, proposed a "double 50%" limit; the second is 2016, the city investment issued corporate bonds The threshold has been adjusted from “double 50%” to “single 50%” and has been tightened.Specifically:

    On January 15, 2015, the CSRC officially issued the “Measures for the Administration of Issuance and Transaction of Corporate Bonds”, which expanded the issuer from a listed company to all corporate legal persons, but 69 of them clearly stipulated that the issuer does not include the local government financing platform. the company. In actual operation, in view of the lack of a unified list of local government financing platforms, the CSRC has relaxed the issuance of debts from platform companies that have withdrawn from the CBRC platform, and has developed corresponding screening criteria at the end of July 2015. There are two cases. The issuer may not issue corporate bonds:

    1. Listed in the list of local government financing platforms of the China Banking Regulatory Commission; 2. In the last three years (non-public issuance for the last two years), the cash inflow from the local government and the cash inflow from the issuer's operating activities accounted for an average of more than 50%, and most recently In the three years (non-public issuance for the last two years), the income from the local government accounts for an average of more than 50% of the revenue, except for the funds raised for provincial-level affordable housing.This means that if the city investment is not included in the list of the CBRC platform, and the average cash flow from the local government in the last three years (the last two years of non-public issuance) or the average proportion of operating income is not more than 50% Corporate bonds can be issued. In addition, the funds raised for provincial-level affordable housing can be exempted from the “double 50%” limit.

    On September 2, 2016, the media reported that the SFC and the Shanghai Stock Exchange confirmed the threshold for issuing corporate bonds to improve the platform, and revised the screening criteria as follows:1. Adjust "double 50%" to "single 50%",That is, in the last three years (the last two years of non-public issuance), the average income and operating income from the local government should not exceed 50% (except for raised funds for provincial-level affordable housing), and the cash flow ratio indicator should be cancelled.2. Adjust the indicator calculation method,The issuer can choose the arithmetic average ratio or the weighted average ratio as the calculation method of the local government revenue ratio, and the weighted average ratio = the total income from the local government in each year / the total annual operating income * 100%.

    It can be seen from the issuance amount and proportion of the city investment company bonds.In 2016, the company issued a large year for the city investment company bonds. The annual issuance amounted to 738.01 billion yuan, accounting for 29.5% of the issuance of city investment credit bonds. In 17 years, the issuance of city investment corporate bonds fell to 371.08 billion yuan, a decrease of 17%. The proportion of corporate bonds issued in 18 years was basically the same as that in 17 years. It can be seen that the 17-year decline has a greater relationship with the increase in corporate bond issuance threshold in September of the 16th.

     If the exchange relaxes and borrows new and old, which city investment will obviously benefit?

    Which city investment will have an impact?

    According to Wind's calibre, as of March 12, 2019, the balance of corporate investment in the city's investment platform was 1,168.5 billion yuan, involving 622 issuers.By region,Jiangsu, Zhejiang and Beijing City Investment Corporation's debt balance ranked the top three, respectively, 34.42 billion yuan, 157.2 billion yuan and 105.9 billion yuan. In 19 years, the areas where the city investment company's debts expired and the pressure for resale was relatively large were Inner Mongolia, Heilongjiang, Guizhou, Jiangxi, and Shanxi, accounting for more than 40% of the total corporate bonds.According to the sub-subject rating,Among the 622 issuers, AAA accounted for 16%, AA+ accounted for 31%, and AA and below accounted for 53%.

     If the exchange relaxes and borrows new and old, which city investment will obviously benefit?

     If the exchange relaxes and borrows new and old, which city investment will obviously benefit?

    Since the beginning of September 2016, the bond threshold of the city investment issuing company was adjusted from “double 50%” to “single 50%”. After that time, the city investment of issuing corporate bonds must meet the limit of 50% of the government revenue. Therefore, the impact of this policy relaxation is limited.

    If you relax the "single 50%" limit, it is obvious to the two types of city investment:

    1. City bonds issued before September 2016, but have not issued corporate bonds afterwards.Prior to September 2016, city investment from government revenues exceeding 50% could be adjusted to obtain no more than 50% of government cash inflows. However, after the issuance threshold became "single 50%", some of the city investment no longer met the conditions for issuing corporate bonds, which led to the failure to issue corporate bonds after September 16th. This time, the company re-issued corporate bonds for this type of city investment. Borrowing new and old conditions.

    2. The city investment due to the issuance of corporate bonds for the provincial-level affordable housing project.Although some urban investment does not meet the “double 50%” or “single 50%” regulations, the funds raised for provincial-level affordable housing projects can be exempted from this restriction, so that corporate bonds can be issued. However, in the latter stage, there may be no provincial-level affordable housing projects, and it is no longer possible to issue corporate bonds. The relaxation will be beneficial to the re-issuance of corporate bonds by such urban investment.

    Due to the possibility of debts due within 6 months, corporate bonds will be issued for the purpose of borrowing new loans, and the upper limit of 50% of government revenue will be released. Therefore, we have calculated the situation of urban investment company bonds due and resold within 6 months, with a total scale of 109.8 billion yuan. Among them, the balance of urban investment corporate bonds issued before September 2016 was 98.6 billion yuan, involving 114 issuers; the balance of urban investment corporate bonds issued in September 2016 and later was 11.2 billion yuan, involving 21 issuers.

    Among the 114 urban investment issuers that issued corporate bonds before September 2016, there were 54 companies that had not issued corporate bonds in September 2016, involving 64 vouchers, with a total balance of 42.6 billion yuan. There are 11 in Jiangsu Province, 6 in Zhejiang Province, 4 in Hunan Province and 4 in Sichuan Province. These city investment issuers will benefit significantly after the company’s debts are borrowed from the new and old issuance conditions..

     If the exchange relaxes and borrows new and old, which city investment will obviously benefit?

    risk warning:

    1. The relevant policies of the city investment exceeded expectations: If the relevant policies of the city investment are more than expected, it will be unfavorable for the development and financing of the city investment platform business.

    2. The fiscal revenue exceeds the expected decline: If the fiscal revenue exceeds the expected decline, the pressure on the local government to repay debts will be higher, and the risk of default on urban investment bonds will rise.

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    Editor in charge: Robot RF13015

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