SMM News: local bond issuance accelerated, for infrastructure continuous blood transfusion, nearly two months, infrastructure approval projects and investment amounts have significantly warmed up.
According to the data, a total of 672 local bonds were issued in the first half of this year, with a issuance scale of 2.849133 trillion yuan. In the first five months, the size of local government bonds issued nationwide was 418 billion yuan, 364.2 billion yuan, 624.5 billion yuan, 226.7 billion yuan and 304.3 billion yuan, respectively. In June, the issuance rate of local bonds accelerated noticeably. A total of 183 local bonds were issued nationwide, with an issuance scale of 899.551 billion yuan, including 319.8 billion yuan for general bonds and 579.8 billion yuan for special bonds, with a monthly issuance reaching the highest level so far this year.
Experts believe that the acceleration of local bond issuance is a concrete manifestation of the increased efficiency of the active fiscal policy, and has played an important role in stabilizing investment, especially in improving the sources of capital construction funds and speeding up the recovery.
From the data point of view, in the past two months, infrastructure approval projects and the amount of investment have shown a very significant recovery. In particular, the Circular on the issuance of Special Bonds of Local governments and the financing of supporting projects issued in early June (hereinafter referred to as the "New regulations on Special Bonds") clearly allows special bonds to be used as capital for major projects that meet the requirements, and the projects cover railways, national and local highways, power supply and gas supply projects, and so on. Then, the local infrastructure investment pressed the fast forward button, and the reporter noticed that from the local development and reform commissions and local governments to the National Development and Reform Commission, the examination and approval of major infrastructure projects has been significantly accelerated, and the construction plans for major projects launched in many places since June have reached trillions of yuan.
At present, the new local bonds issued by various localities are mainly used for the construction of local projects under construction, actively support the victory of the three major battles, and strive to promote the transformation of shantytowns, railways, water conservancy projects, rural revitalization of urban infrastructure, agricultural and rural infrastructure, and so on. The effect of stable investment is obvious. For example, Beijing issued 60.69 billion yuan of special bonds for the transformation of shantytowns on June 28, accounting for 74.6 per cent of the issuance in the same period. At the same time, the bonds issued by Shandong Province on June 25 included 3.128 billion yuan in special bonds for the construction of high-speed rail in southern Shandong. In addition, in June, various localities also launched a list of major projects, with investment quotas ranging from hundreds of billions of yuan to trillions of yuan. According to incomplete statistics from reporters, more than 30 infrastructure projects have been approved by the NDRC this year, with a total investment of more than 850 billion yuan.
According to historical data, the period from June to September is usually the peak of local bond issuance, and the actual development in June was larger than the market had expected.
Fu Yifu, a senior researcher at the SUNING Financial Research Institute, said that there are two main reasons. On the one hand, tax cuts and fees have been unprecedented this year, resulting in a slowdown in short-term fiscal revenue, and the issuance of local bonds can be used as an important supplement to local fiscal revenue. In addition, since the second quarter, the external economic situation has been complex, which has also brought new challenges to economic development. In the new regulations on special bonds, it is mentioned that "special bonds are allowed to be used as capital for major projects that meet the requirements," actively encourage financial institutions to provide supporting financing support, "and" strive to complete issuance by the end of September of that year and give full play to the benefits of the use of funds as soon as possible. " It not only implies that infrastructure may still be an important starting point for stable economic operation in the future, but also partly explains the substantial increase in bond issuance in June.
Looking forward to the second half of the year, the intensity of infrastructure construction may be greatly enhanced, and special bonds are expected to continue to invest in infrastructure as more relevant policies fall to the ground in the future.
On June 21, the Ministry of Finance and the Ministry of Natural Resources announced the measures for Budget Management of Land Reserve projects (for trial implementation). The first batch of pilot land reserve areas in Beijing, Tianjin, Hebei and Henan provinces (cities) implemented full life cycle budget management according to the project. It is required that "when each province allocates the special debt limit, it may properly tilt the cities and counties (districts) that carry out the pilot project," the measure also stipulates that "shantytown reconstruction projects may be implemented in accordance with the relevant provisions of the competent departments and with reference to these measures." According to the contents of the administrative measures of the two ministries mentioned above, the new regulations on special debts are expected to make efforts in the field of land storage and shed reform.
Wang Binpeng, an analyst at Huachang Securities, believes that from the source of funds, the funds provided by special bonds may exceed expectations in the second half of the year, the financing of urban investment may also provide incremental funds, and the portion of government fund income used for infrastructure may also exceed expectations. in addition, the expansion of the amount of special bonds, for example, may provide an increase in capital for infrastructure construction. Due to the low base and the power of policy and capital, infrastructure investment is expected to accelerate in the second half of the year.
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