On the morning of January 2, Henan issued 51.9 billion yuan of special bonds. Then, in the afternoon of that day, Sichuan issued 35.671 billion yuan of special bonds. Sichuan and Henan provinces became the first batch of regions to issue special bonds in 2020, with a total of 87.571 billion yuan of special bonds issued on January 2.
In terms of quantity, last January was 418 billion yuan, slightly more than last year. Zheng Chunrong, a professor at Shanghai University of Finance and economics who has studied local debts for a long time, said in an interview with the times weekly that the issuance of bonds in January is a new move in 2019. The allocation of bond issuance tasks to the whole year is conducive to avoiding bond issuance concentrated in the middle of the year and making bond issuance more stable.
It is worth mentioning that in 2019, the issuance of special bonds was first advanced to January and started on January 21 - in contrast, the issuance time of special bonds in 2020 was 19 days earlier than that in 2019.
Guangdong issued the largest amount of bonds in January
The first batch of 51.9 billion yuan special debt in Henan is mainly invested in municipal and industrial park infrastructure, social undertakings, transportation and logistics infrastructure, ecological environment protection, agriculture, forestry and water conservancy, etc. At the executive meeting of the State Council held in September 2019, it was clearly required that special bonds issued in advance shall not be used in land reserve and real estate related fields.
It should be noted that Guangdong will issue 123.5 billion yuan of special bonds in mid January, which is the largest area among all provinces and cities. The second is Shandong Province, with 71.6 billion yuan of special bonds issued in January.
The scale of special bonds is expected to expand in 2020
Zhang Xiaojing, deputy director of the national finance and development laboratory, told the times weekly that the key to expanding local debt in 2020 is how much. In the economic downturn, the government is more cautious about projects than before. On the other hand, the use of local debts is limited and cannot be used at will. Some local debts are not fully used, which is related to the lack of good projects.
However, Zheng Chunrong believes that in January, local bonds were issued intensively. At present, the scale has not increased significantly, but it is relatively stable on the whole, which is conducive to raising funds in advance, ensuring the progress of project construction and achieving the goal of stable growth.
It should be noted that the 2020 special debt quota will be finally confirmed at the national two sessions in March this year. In recent years, the amount of special bonds has been rising. In 2019, the amount of special bonds increased by 800 billion yuan to 2.15 trillion yuan compared with the previous year. Under the pressure of stable growth, the market generally expects that the scale of special bonds will be expanded to about 3 trillion yuan in 2020.
In addition, on January 1, the central bank announced that it decided to reduce the reserve ratio of financial institutions by 0.5 percentage point on January 6, 2020, and release about 800 billion yuan of long-term funds. Mr Zheng said the reduction would help reduce the cost of financing local government bonds.
Liu Kun, Minister of finance, requested at the national financial work conference held from December 26 to 27, 2019, to make good use of special bonds of local governments, adhere to the principle of funds follow projects, optimize the structure of bond investment, implement policies such as expanding the use of special bonds, expand effective investment as soon as possible, and form an effective pull on the economy.