The Ministry of Finance issued a quota of 1 trillion new special bonds

Under the policy guidance of counter cyclical regulation, the issuance of special bonds was accelerated. Recently, the news that the Ministry of finance has issued some new special debt quota in 2020 to the provincial financial departments spread widely, which caused market concern. On November 27, the budget department of the Ministry of Finance confirmed that in order to speed up the issuance and use of special bonds of local governments, drive effective investment to support the supplementary board and expand domestic demand, according to the authorization of the seventh meeting of the Standing Committee of the 13th National People's Congress and with the approval of the State Council, the Ministry of Finance recently issued a quota of 1 trillion yuan for some new special debts in 2020. It is understood that the quota of 1 trillion yuan accounts for 47% of the newly increased special debt quota of 2.15 trillion yuan in 2019, which is controlled within the scope of legal authorization. According to the authorization of the Standing Committee of the National People's Congress at the end of last year, the State Council can issue a part in advance that should be within 60% of the new local government debt limit in that year. Based on this, the market previously estimated that the amount issued this year is expected to reach 1.29 trillion yuan. At present, the release time and specific flow direction of the released part in advance are not clear.

According to the media combing the total amount of special debts this year, Guangdong, Shandong and Jiangsu, which are among the top three, are expected to get more special debts issued in advance. At the executive meeting of the State Council held on September 4 this year, it was determined that according to the needs of local major project construction, the newly increased amount of special debt for the next year should be issued in advance according to the regulations; the scope of special debt can be used as project capital clearly defined as a major infrastructure area in line with the above key investment directions; the project management should be strengthened to prevent the occurrence of "half pulled" projects. It is mentioned in the national regular meeting that the newly increased amount of special debt issued in advance will be mainly used in transportation infrastructure such as railway, rail transit, urban parking lot, energy projects such as urban and rural power grid, natural gas pipeline network and gas storage facilities, ecological environmental protection projects such as agriculture, forestry and water conservancy, urban sewage and waste treatment, vocational education, people's livelihood services such as kindergarten, medical care, pension and cold chain logistics facilities Water, electricity, heat and other municipal and industrial park infrastructure. Special debt funds shall not be used for land reserve and real estate related fields, debt replacement and industrial projects that can be fully commercialized. The issuance of special bonds is an important means to leverage investment and help local governments stabilize the economy. Liu Shangxi, President of the Chinese Academy of financial Sciences, said that the State Council required that the new amount of special bonds for next year be issued in advance according to regulations, which is conducive to supporting the growth of infrastructure investment from the fourth quarter to the beginning of next year. By the end of September, the amount of new local debts this year was basically used up.

In the fourth quarter, the issuance of local bonds decreased significantly. According to the latest data released by the Ministry of Finance on November 27, 96.46 billion yuan of local government bonds were issued nationwide in October. Among them, the newly added bonds are zero, that is to say, the issued bonds are used to replace bonds and refinance bonds. Affected by this, the investment growth rate dropped significantly in October. From January to October, infrastructure investment increased by 4.2% year-on-year, 0.3 percentage points lower than that from January to September, and the growth rate was at a low level. In order to further stabilize investment, the executive meeting of the State Council held on November 13 proposed to reduce the minimum capital ratio of some infrastructure projects. At the Fifth China PPP development (financing) forum held before this, Zou Jiayi, Vice Minister of the Ministry of finance, revealed that he would explore the combination of PPP and special debt, leverage social investment and play a synergistic effect. The core of countercyclical regulation is capital. For major projects such as infrastructure construction, the source of capital is still self-designed project bonds in the future. Special bonds have many advantages, such as policy support and encouragement, high issuance efficiency and low issuance interest rate. They are the main financing varieties relied on by local governments in the future. In the absence of other alternative bond varieties, it is expected that local special bonds will Investment in key projects still plays a significant role. " He Nanye, a special researcher of Suning Financial Research Institute, said.