The wind vane of trust has changed! The organization has changed from real estate to political credit

 The wind vane of trust has changed! The organization has changed from real estate to political credit

Wu Di was surprised to find that the number of government credit projects reported by the company had increased significantly, and for the first time in many years, it exceeded the scale of real estate trust in terms of scale.

As the trust manager of a trust institution in the south, Wu Di also learned in his business communication with the industry that there were trust companies that comprehensively carried out the political credit business in the second half of the year, and more than one of them strengthened the layout of the political credit business. In the first half of the year, after the regulation of real estate trust tightened, the life of some trust institutions was not very easy. Wu Di said with emotion.

What is more incomprehensible to Wu Di is that since the second half of the year, he found that when individual trust companies were developing their businesses, some county-level urban investment platforms in some regions had projects with relatively high risk coefficient, and the industry even did so. When some trust institutions do political credit business, the main body of credit risk is obviously sinking.

He was confused about this - where is the direction of the trusts business? How should trust institutions transform and develop?

Plus code political trust

Since the third quarter, more than one trust institution has increased the code for the business layout of political trust.

As for the reasons behind this phenomenon, a trust company in Beijing said, first, there is a financing demand, and second, in addition to the basic industry, other targets are not easy to do.

The basic industry trust referred to by the trustee is also called political trust, which refers to the cooperation between the trust company and the platform company of the local government. The trust funds are mainly invested in the construction of infrastructure, livelihood projects and other fields.

From the data point of view, the brief analysis on the development of trust industry in the third quarter of 2019 issued by Yunnan trust pointed out that under the background of regulatory contraction and limited development of real estate trust, trust companies increased their investment in basic industry trust. According to the data, in the third quarter of 2019, the distribution scale of trust products invested in the basic industry was 159416 million yuan, an increase of 23.292 billion yuan on a month on month basis, an increase of 17.11%.

In addition, according to the statistics of pryi standard data, the number of issues to infrastructure in September was 465, accounting for 31.57%; the number of issues to infrastructure in October was 529, accounting for 30.99%, ranking first. However, the issuance of real estate trust declined significantly, accounting for 21.45% in September and 17.87% in October.

In response, relevant principals of Yunnan Trust said that the issuance of real estate trust fell in the third quarter on a month basis, and the issuance of political trust business increased, mainly due to the superposition of macroeconomic and regulatory policies.

Wu Di believes that on the one hand, it is due to the limited real estate business of trust institutions; on the other hand, there is a strong demand for local government platform companies to borrow new and repay old. In the overall environment of the national economic downturn, urban investment platform companies need to continue to expand financing demand and relieve pressure.

Zhang Yu, the trust manager of a trust agency in the north, told reporters that the real estate trust was basically blocked by supervision in the first half of the year, and now the companys real estate trust has not been added. As one of the three business types of traditional trust, the company has significantly increased investment in layout. Compared with industrial and commercial enterprises, government platform institutional financing trust products are also relatively easy to issue, and investors recognition is relatively high. And in the category of industrial and commercial enterprises, especially the enterprises similar to private enterprises, the risk is too high, and investors are afraid to buy to invest. Zhang added to the economic observer.

Credit differentiation

At the same time, Wu Dis biggest feeling is that different platform institutions have more obvious credit differentiation and stratification.

Wu Di said that even if the same category of urban investment platform companies, different regions and different ratings of urban investment platform companies are particularly seriously differentiated. For example, for some regional platform companies like Guizhou and Sichuan, trust business is basically not done. Because there are many defaults of government platform companies in different regions this year, trust institutions will prefer platform companies with higher credit rating when they develop their businesses. Weak platform companies cant get money, such as AA level platform companies, which is more serious than the credit differentiation in the past years. Wu Di said.

Zhang Yu expressed the same feelings about the credit differentiation of the city investment platform company. He said he was reluctant to do so in the three eastern provinces, Yunnan, Guizhou, Xinjiang and Tibet. The company is more a platform company in Jiangsu and Zhejiang. From the perspective of industry, some trust companies also like to do some non-standard but not particularly concentrated areas, such as Gansu, Inner Mongolia and other places. Different trust companies do have some differences. Zhang added.

In addition to the credit differentiation of urban investment platforms in different regions, Wu Di observed that when the financing cost of private enterprises increased this year, the trust financing cost of urban investment platforms actually went down, and the trust funds were more inclined to do the financing projects of urban investment and state-owned enterprises.

Wu Di said that for some high-quality AAA level platform companies, the trust financing cost at the beginning of the year was about 6% - 6.5%, and the interest rate at the end of this year was about 5.5%, and the financing cost continued to decline. In contrast, the yield of AA level platform companies is 6% - 8%, with an upward trend.

In addition, the credit risk differentiation of trust institutions is also reflected in the business of foreign industrial and commercial enterprises.

Wu Di concluded that in the category of industrial and commercial enterprises this year, corporate trust loans are mainly for enterprises with the background of state-owned enterprises, and the number of products made by private enterprises is very small. Because there are too many private defaults, the people who do business rarely go to see private products.

From the perspective of default quantity, according to statistics of Industrial Securities Research Report, the default bond balance of state-owned enterprises from 2019 to now is 13.3 billion, accounting for 11.4%; the default bond balance of private enterprises is 103.04 billion, accounting for 88.6%, little change compared with 90.4% of the previous year.

In this regard, Zhang Yu also said that in the category of industrial and commercial enterprises, the phenomenon of credit stratification is very obvious, and investors are more willing to be state-owned enterprises.

How long can it last?

Although some trust agencies are in full swing, Wu Di is still worried about how long it can last? Will it attract regulatory risk attention?

Wu Di said frankly that in terms of active management business of the whole trust industry, there are mainly three main financing sectors: real estate enterprises, general industrial and commercial enterprises, and urban investment platform companies. Since the first half of the year, the real estate trust has been limited, the business can not be reported and approved, the quota is very limited, the stock is maintained, and the new regulatory policy is still not adjusted. Some trust managers also have the pressure of performance appraisal, so they are more inclined to trust in the political trust category. Wu Di said.

However, for how long the phenomenon will last, Wu said it should last for a while, at least until the Spring Festival. At the end of the year, there was a strong demand for financing from platform companies, and there were few types of trust institutions to choose.

In this regard, Zhang Yu also said that the trust agencys code adding trust depends more on whether the regulatory policy of the regulatory agency for real estate trust has changed. If there is a relaxation of real estate trust next year, this phenomenon may be reversed.

The latest data in the third quarter shows that the scale of real estate trust is still significantly reduced. According to the data of the above-mentioned Yunnan trust Analysis on the development of trust industry in the third quarter of 2019, from the perspective of the distribution scale, the distribution scale of trust products invested in the real estate sector is 207970 million yuan, down 82.735 billion yuan on a month on month basis, down 28.46%. In addition to the decline in the issuance of real estate trust products, the issuance of trust products invested in industrial and commercial enterprises, finance and other categories also declined.

On the other hand, the regulatory policy of risk prevention, deleveraging and strict supervision for the trust industry has been continuing, and reached the most stringent level in history in August 2019.

In the view of industry insiders, the notice on further completing trust supervision in the second half of 2019 (hereinafter referred to as document 64) is more powerful in implementing the main tone of risk prevention, deleveraging and strict supervision than before, and has made clear the regulatory accountability measures. Affected by this, the development of channel business slowed down in the second half of 2019, because the supervision implemented limit management on channel business, requiring no new business. According to Yunnan trust, this change in regulatory attitude is expected to make a significant change to the living environment of the trust industry.

In addition to the traditional real estate trust, political trust, channel trust, asset securitization, consumer finance and other businesses, due to the intensified market competition, their rapid development pace is also appropriately slowed down.

According to Yunnan trust, the concentration of securities operation service trust business has increased, and it is not easy to expand the scale when entering the new army; family trust and charity trust business need to expand the increment, so as to achieve profits, which is not easy to develop rapidly in a short period of time, and further active exploration is needed in the follow-up.

Although, in the context of the current regulatory environment and economic environment, Wu Di felt confused about the business direction of the whole trust industry, but he still had faith in the trust. The economic observer will also continue to pay close attention to the duration of the trust.

(at the request of interviewees, Wu Di and Zhang Yu are pseudonyms)

Source: editor in charge of economic observation network: Wang Xiaowu NF