Special local debt policy is expected to boost investment in infrastructure by more than one trillio

The general office of the central committee and the general office of the state council recently issued a notice on the issuance of special bonds of local governments and supporting financing of projects, allowing special bonds to be used as capital for major public welfare projects that meet the requirements.Institutions expect that the new rules will leverage more than $10,000 infrastructure investment.

"Allowing special bonds as qualified capital for major projects is equivalent to using special bonds for qualified project entities and further enhancing their credibility in the financial market, providing more adequate credit guarantee for project entities' financing."Academy of China's finance performance management research, deputy director of professional committee members in accordance with the group of the "securities daily" reporters zhang, form a complete set of special bonds of local government support project financing, means that the original active fiscal policy in supporting the support of finance is becoming more active, leverage effect, leading the demonstration effect of fiscal policy and monetary policy effectively combine together, can achieve market effect, provides a continuous major projects operating stability of the financial support.

So how much infrastructure investment can the new rules leverage?In this year's report on the work of the government, we will effectively use local government bonds.This year we plan to allocate 2.15 trillion yuan in special bonds for local governments, an increase of 800 billion yuan over last year, to provide financial support for key projects.According to our correspondent's calculations, excluding the 859.8 billion yuan of new special bonds issued in the first five months of this year, 1.29 trillion yuan remains to be issued from June to December.

According to the calculation of huatai securities, based on the 2.15 trillion yuan increase limit of local special bonds this year, if 30% is invested in infrastructure construction and 30% of capital contribution, 645 billion yuan of infrastructure investment can be leveraged before the new policy.After the introduction of the new policy, if 30% of the capital invested in special infrastructure bonds is used as infrastructure capital, the infrastructure investment that the government can leverage will reach 1.1 trillion yuan.

Minsheng securities, suppose to pay debt + 2019 rail toll road special bond issuance of flat compared with last year, and assuming that the second half began to issue local railway related additional targeted debt (local), issuance for the special debt to 5%, is expected to be issued in June 2019 - December toll roads pay + + rail rail additional targeted debt of 226.95 billion yuan, calculated according to 20% capital ratio, is expected to pull the infrastructure investment 1.13 trillion yuan, accounting for about 10% of the annual financial investment in infrastructure caliber.

Zhang in accordance with the group believes that the local special bonds mainly focus on the national and local affordable housing, transportation, water conservancy facilities and so on tie up funds and operation cycle of major projects, the future will gradually increase the higher education, health care, such as ecological environmental protection of special varieties of bond issuance and scale, and will issue all the way "area" construction, the Yangtze river economic belt with regional characteristics, such as special bonds.

"New policy support and leverage, ease restrictions on using special bonds, special bond to the front door wide open place, special bond use the project subject to improve the government credibility and the financing ability, guarantee the project main body has a stable source of funds, give birth strongly promote the national major projects and key regional development strategy implemented smoothly."Zhang yiqun said that in strengthening the risk prevention, the implementation of dredging and blocking, emphasizing the "control of the actual income level of the project" and "one-to-one" principle, to prevent all kinds of fund financing platform to take the opportunity to magnify leverage and cause new hidden debt risk.

In short, allowing special bonds to be used as capital for major projects will be of great benefit to stabilizing investment, expanding infrastructure and boosting consumption in the future, and will play a crucial role in effectively fending off external risks and achieving a reasonable range of operation for the Chinese economy, zhang said.(credit: securities daily)