Key takeaways from this issue:
Next year, urban investment bonds will usher in a peak period of redemption, and about 4,013.07 billion yuan of urban investment bonds will be resold at maturity in 2022 (regardless of the short maturity issued in this time period). March and April 2022 are the peak periods for maturity resales, with a scale of 492.49 billion yuan and 467.46 billion yuan respectively, and it is necessary to pay attention to the credit risks brought about by the rise in the pressure of debt repayment in stages.
The cooling of the property market affects land finance or indirectly affects the solvency of urban investment, the financial dependence of land in 2020 is higher than 40%, and the proportion of bonds due next year is more than 30% of the cities in Shanxi Taiyuan, Shandong Weifang, Shandong Jining, Jilin Changchun, Jiangxi Yingtan, Hubei Jingmen, Guangdong Zhanjiang, Shandong Rizhao, Henan Nanyang, etc.
Under the pressure of greater debt redemption, it is not excluded that the future will be able to properly resolve the existing debt + local areas, especially in areas with large debt pressure, the risk of tail urban investment "explosion" is the possibility, and the qualitative differentiation of urban investment is an inevitable trend.
Tang Yaohua, a researcher at the 21st Century Asset Management Research Institute, and Di Ruoyu, an intern, comprehensively reported that since the third quarter of this year, the cooling of the real estate market has affected the local finance and then affected the urban investment platform, although the real estate financing policy has slightly picked up in some areas, but considering that the policy transmission takes time and consumers change their expectations, it is expected that the impact of real estate on local finances and even urban investment platforms will continue until the first quarter of next year.
Next year, the urban investment platform will usher in the peak period of debt redemption, especially in March and April next year. According to the statistics of Guojin Securities, about 4,013.07 billion yuan of urban investment bonds will be resold at maturity in 2022 (regardless of the short maturity issued in this time period).
In the context of policy tightening, this year, the difficulty of refinancing in some areas has increased, and regional differentiation has increased. As of November 26, 2021, a total of 8 provinces this year have reduced the stock of urban investment bonds compared with the end of 2020. How to deal with the maturity pressure will become a problem for urban investment platforms in some areas with greater debt pressure and the impact of real estate cooling. Under the pressure of greater debt redemption, it is not excluded that in the future, the possibility of "bursting" of the risk of urban investment in the tail of the local area, especially in the area with large debt pressure, is not ruled out, and the qualitative differentiation of urban investment is an inevitable trend.
Next year, the urban investment bonds will meet the peak period of redemption, and 4 trillion yuan of urban investment bonds will mature
According to the statistics of Guojin Securities Research Report, in 2022, urban investment bonds are facing certain repayment pressure, and about 4,013.07 billion yuan of urban investment bonds are due and resold throughout the year (regardless of the short maturity issued in this time period). Specifically, the maturity scale was 2,417.88 billion yuan, the total amount of prepayment of principal was 228.52 billion yuan, and 1,366.67 billion yuan of urban investment bonds entered the resale period. According to the estimation of the resale ratio from 50% to 70%, the actual resale scale next year will be 680 billion yuan to 960 billion yuan. If you consider the short-term financing that will be issued and matured next year, the total repayment amount will be about 4 trillion yuan.
Judging from the monthly maturity resale, March and April 2022 are the peak periods for maturity resale, with a scale of 492.49 billion yuan and 467.46 billion yuan respectively, and it is necessary to pay attention to the credit risk brought about by the rise in the pressure of phased debt repayment.
From the perspective of provinces, Jiangsu, Zhejiang, Shandong, Sichuan and Hunan are the top five provinces in terms of urban investment bond maturity and resale volume next year, of which Jiangsu Province's urban investment bond maturity and resale scale in 2022 exceeds 900 billion yuan, which is much higher than the second-ranked Zhejiang Province (about 380 billion yuan).
From the perspective of securities, the pressure on the maturity and resale of private bonds next year is the greatest, about 1245.18 billion yuan. It was followed by medium-term notes with $790.38 billion, and directional instruments at $628.70 billion.
According to the statistics of Huaxi Securities Research Report, the next exercise date (resale) in 2022 urban investment private debt totaled 895, with a total amount of 752 billion yuan, involving 545 urban investment platforms. The ratings of these urban investment platforms are mainly AA+ and AA, of which the resale pressure of 292 AA urban investments is worth paying attention to.
From the perspective of administrative level, the amount of private debt resale of district and county-level urban investment entities next year is the largest, with 326.1 billion yuan (accounting for 43%), followed by the resale amount of 256.4 billion yuan (accounting for 34%) of the prefecture-level and municipal platforms in 2022.
From the perspective of regional distribution, the five provinces with the largest amount of urban investment private debt resale next year will be Jiangsu Province (181.8 billion yuan), Zhejiang Province (128.4 billion yuan), Shandong Province (79.4 billion yuan), Chongqing Municipality (51.7 billion yuan), and Sichuan Province (35.1 billion yuan). In terms of prefectures and cities, the five cities with the largest amount of private debt resale by urban investment next year will be Shaoxing (36.3 billion yuan), Suzhou (36.1 billion yuan), Huzhou (29.6 billion yuan), Nantong (29.1 billion yuan) and Qingdao (22.9 billion yuan).
Real estate risk transmission may affect the solvency of urban investment in some areas
Since the land transfer fee returned by the government is one of the important sources of funds for urban investment companies to repay their debts, the property market has cooled down significantly since September or affected the solvency of some areas.
At present, affected by the cooling of the property market and the cold land market, the land transfer fee in some areas has been significantly reduced year-on-year. According to data from the Middle Finger Research Institute, from January to October this year, the transfer of various types of land in 300 cities across the country reached 4.36 trillion yuan, down 7.56% year-on-year. Among them, the transfer fee of various types of land in October was 333.43 billion yuan, down 33.5% year-on-year. According to the data of E-House Research Institute, the land transfer fee in the first 10 months of many cities decreased by more than 50% year-on-year, such as Fuzhou, Nanchang, Kunming, Lanzhou, Langfang and so on.
The dependence of local governments on land transfer fees has increased year by year. We measure the financial dependence of land by land transfer income / (government fund revenue + general public budget revenue), in 2020, the total amount of state-owned land use right transfer fees is 8.21 trillion yuan, and the financial dependence of land climbs to 29.72%.
So which areas are more dependent on land finances? According to the statistics of Guojin Securities, in terms of land fiscal revenue dependence, the land financial dependence of seven provinces and cities in Zhejiang, Jiangsu, Guangxi, Chongqing, Sichuan, Shandong and Anhui is higher than 45%, reaching 55.24%, 52.00%, 49.97%, 48.37%, 48.28%, 48.05% and 45.03% respectively.
Industrial Securities Research Report believes that the possible path of real estate to urban investment risk transmission mainly lies in the impact on government financial resources, especially in terms of "land finance"; at the same time, the debt payment and rollover pressure of urban investment itself are also factors that need to be considered.
According to the Research Report of Guojin Securities, the financial dependence on land in 2020 is higher than 40%, and the proportion of bonds due next year will exceed 30%, including Taiyuan in Shanxi, Weifang in Shandong, Jining in Shandong, Changchun in Jilin, Yingtan in Jiangxi, Jingmen in Hubei, Zhanjiang in Guangdong, Rizhao in Shandong, nanyang in Henan, etc.
In particular, the total land transaction price in Taiyuan, Shanxi Province, in the first 10 months of this year was 9.702 billion yuan, a decrease of 75.9% over the same period last year, and it is necessary to pay attention to the impact of land financial changes on local financial resources.
In addition to the impact of the reduction in land sales income, real estate-related land value-added tax, enterprise income tax, etc., as well as related corporate taxes and fees in the upstream and downstream of the industrial chain, are also quite significant in the local fiscal revenue, so under the risk transmission of real estate, the future cooling of the property market may have an impact on local government fiscal revenue from many aspects.
In some areas, the scale of urban investment bonds continues to decline, and regional differentiation has increased
If local fiscal revenue is affected, urban investment bonds will rely more on rolling financing to repay their debts. Since the beginning of this year, the supervision policy of urban investment bond financing has gradually become stricter, and the net financing scale of urban investment bonds has decreased continuously in September and October this year, and the net financing scale of urban investment bonds has been negative in May this year. According to Wind data, the net financing of urban investment bonds in September was 111.699 billion yuan, compared with 167.465 billion yuan in the same period last year; the net financing of urban investment bonds in October was 53.237 billion, compared with 129.014 billion in the same period last year, a significant decline compared with the same period last year. In November, the net financing scale of urban investment bonds rebounded significantly.
(Data source: Wind, unit: 100 million yuan, compiled by 21st Century Asset Management Research Institute)
Urban investment bond financing also shows the characteristics of regional differentiation. Since the beginning of this year, the stock of urban investment bonds in some areas has declined, and as of November 26, 2021, a total of 8 provinces have declined compared with the end of 2020, namely:
Liaoning, Inner Mongolia and Heilongjiang, since 2018, the scale of existing urban investment bonds has been reduced year by year. In addition to a few prefecture-level cities such as Shenyang, the scale of investment bonds in other prefectures and cities in Liaoning, Inner Mongolia, Heilongjiang and other regions is declining.
In Tianjin, Beijing, Guizhou, Yunnan and Ningxia, the scale of existing urban investment bonds has declined for the first time in the past three years.
The characteristics of the decline in the scale of investment bonds in Tianjin, Guizhou and Yunnan are different, and the scale of urban investment bonds in Tianjin has decreased the most on the municipal platform and binhai New Area. Yunnan is mainly due to the continuous decline in net financing of provincial platforms, resulting in a decrease in the stock of urban investment bonds in Yunnan Province. Guizhou has seen a decline in the scale of investment bonds on both provincial-level platforms and local-level municipal platforms.
Next year, urban investment bonds will usher in a peak period of redemption, and areas with high dependence on land finance, greater pressure from real estate risk transmission and a high proportion of bonds due next year will face certain debt repayment pressure if refinancing is not smooth next year. It is not excluded that the risk of urban investment in local areas, especially in areas with large debt pressure, may be "exploded", and the qualitative differentiation of urban investment is an inevitable trend.
(Report source: Industrial Securities, Huaxi Securities, Shenwan Hongyuan Securities, Tianfeng Securities; the information in this article does not constitute any investment advice, the content published is from licensed securities institutions, does not represent the platform views, please judge and make decisions independently)
For more information, please download the 21 Finance APP