Nearly 40 Percent of the Special Bonds Issued in Advance Will Usher in the Peak of Issuance in the First Quarter

According to Wind statistics, as of February 10, 541.6 billion yuan of new special bonds issued by local governments this year, accounting for 37% of the "early approval" of special bonds. Experts expect that in the context of fiscal efforts, the first quarter will be the peak period for the issuance of new special bonds, which will provide sufficient financial support for infrastructure investment and help stabilize growth.

　　The first quarter will usher in the peak of issuance

　　Infrastructure investment is an important starting point for this year's policy to stabilize growth, and special bonds are an important source of funds for infrastructure investment. The data shows that special bonds are achieving "early issuance".

　　Compared with the same period in 2021, the amount of new special bonds issued this year is more obvious. In January and February 2021, no new special bonds were issued, and more than 500 billion yuan have been issued this year. Among them, 484.4 billion yuan was issued in January, and since February, Fujian, Tianjin, Guizhou and other places have issued a total of 57.2 billion yuan. According to the annual issuance target of 3.65 trillion yuan set in 2021, the issuance progress is close to 15%.

　　The early issuance of new special bonds this year is mainly due to the earlier issuance of "early approval" special bonds. In mid-December last year, the Ministry of Finance said it had issued an advance special debt limit of 1.46 trillion yuan to all localities in 2022.

　　The Ministry of Finance previously clearly required the issuance of special bonds in 2022 to be "early, accurate and fast", considering the pressure of steady growth in the first quarter of 2022, requiring all localities to issue and use them early in the first quarter of 2022. Many places have responded positively to this. For example, in January, Shanghai issued the "Several Policies and Measures for Expanding Effective Investment and Stabilizing Economic Development in Shanghai in 2022", which clearly strives to complete the issuance of all local government special bonds in the first half of the year.

　　"At present, many provinces are required to complete the issuance of 'early approval' special bonds in the first quarter, and no arrangements have been made for the annual issuance rhythm." Although Shanghai took the lead in saying that it was a case to complete the issuance of all local government special bonds in the first half of the year, it reflected the overall demand of the pre-issuance of special bonds. Ming Ming, chief analyst of fixed income at CITIC Securities, expects that the net financing of local bonds will reach trillions of yuan in the first quarter.

　　Invest in nine areas

　　While the funds are actively in place, special debt projects are also trying to keep up and implement the "early use" requirements. The China Securities News reporter verified from close regulators that the recent regulatory authorities have required local governments to report special bond projects in 2022, and still require investment in nine major areas such as transportation infrastructure previously stipulated.

　　Experts believe that the early issuance and early use of special bonds have effectively supported infrastructure investment. The Ministry of Finance previously said that it will continue to strengthen supervision and promote the issuance and use of quotas in advance in the first quarter of 2022, providing strong support for stabilizing the macroeconomic market.

　　Many of the new special bonds have indeed been invested in infrastructure-related areas. According to statistics from Zhou Yue, chief analyst of fixed income at Zhongtai Securities, the new special bonds in January were mainly invested in municipal and industrial park infrastructure, affordable housing projects, social undertakings, etc., of which more than 40% were invested in municipal and industrial park infrastructure.

　　Ming Ming said that the special debt lending has provided financial support for investment projects such as infrastructure construction, which will play a supporting role in the economy and stimulate the demand for financing in the real economy. In this case, banks are expected to get more high-quality projects, which will help with credit growth. According to the analysis of historical experience, the increase in net financing of local special bonds has helped to promote the growth of fixed asset loans, and it takes about a quarter from the issuance of local bonds to the growth of loans.