The Pilot Scheme For Local Voluntary Debt Issuance Was Initially &Nbsp, And The Old Debt Clearing Ideas Emerged.

In August 3rd, this newspaper learned from authoritative sources that "the Ministry of finance has produced a preliminary plan to grant some provincial (city) pilot bonds."

A banking industry lamented that this provided a rare opportunity to clean up standardized platform loans.

Close to the Ministry of finance, people familiar with the matter said that the main body of issuing bonds is local governments, rather than local financing platforms, and the operation rules will be quite different from the mode of agency issuing local government bonds by the Ministry of finance.

"However, the Ministry of finance has only formed a principled opinion, and the detailed plan has not yet been promulgated."

The source pointed out.

As early as the beginning of July this year, 10 trillion and 700 billion of the local government debt had not yet been officially disclosed, there were media reports that the Ministry of finance was working hard to formulate a pilot management method for self financing bonds, and at the same time assisted the pilot areas in formulating the operation method of bond issuance and payment.

At the same time, the central government is planning to "close the back door and open the front door". At the same time, the local financing platform is suffering from the debt repayment peak in the next two years.

According to the Audit Commission report, 41.66% of the 10 trillion and 720 billion local government debt balances due in late 2010 will be repaid in the next two years.

And the CBRC has asked banks to "not extend the interest and interest of the platform loans, and borrow new and old ways in various ways".

Although there has been a case similar to "Yunnan highway", the decision-making level of local financing platform will not be relaxed.

Based on this, banks are picking platforms.

1. "plate" conjecture

Those close to the Ministry of Finance said that the budget law will not be an obstacle to local debt pilot.

As early as April this year, in a speech on solving the financing problem of urbanization, the central bank governor Zhou Xiaochuan gave the idea that municipal debt may be a better solution than the local government financing platform that is now spread all over the country.

Zhou Xiaochuan analysis, rather than allowing local governments to borrow in disguise, it is better to standardize the pricing of financial assets by issuing bonds.

The local government began issuing its own debt issue, which can be seen in the audit report of the national audit of local governments in July.

In order to resolve the local government debt of up to 10 trillion and 700 billion and GDP 30%, the Audit Commission report gives a direction: "establish a standardized local government debt financing mechanism, implement full caliber supervision and dynamic monitoring.

It is possible to study and give provincial governments moderate debt raising rights, and gradually explore and push them to qualified municipal governments.

It gives local provincial governments moderate debt to provide the possibility for local governments to issue bonds independently.

According to media reports, the amount of self issuing bonds in Guangdong Province, which has already been tried out, is roughly the same as that of the central government in issuing 11 billion of the 200 billion local debt distribution in Guangdong, but the main body of the debt issuance has become the Guangdong provincial government.

Shenzhen, which is adjacent to the Hongkong area, is ahead of the city, with media reports that the city will explore the issue of local debt in Hongkong, according to the Government Bulletin released in June, and people know that the plan will be released in September this year.

Those close to the Ministry of Finance said that the budget law will not be an obstacle to local debt pilot.

The budget law stipulates that local budgets at all levels should be compiled according to the principle of balance between income and expenditure and balance of payments.

Except for other provisions of the law and the State Council, local governments shall not issue local government bonds. "

The local autonomous debt issuance pilot program is specially approved by the State Council.

The direct issuance of local government debt is to occupy the "plate" of 200 billion yuan issued by the central government on behalf of the government at the beginning of the year, or by the State Council's special approval quota.

In addition, for the size of China's local government debt, the 10 trillion and 700 billion scale released by the Audit Commission has been unanimously approved by the relevant departments.

Close to the authority of the CBRC, as at the end of 11 2010, the size of the national local financing loan balance of 9 trillion and 90 billion yuan was not inconsistent with the overall scale of the 10 trillion and 700 billion local government debt disclosed by the Audit Commission.

2. mechanism suspense

A Rating firm believes that the real local government debt rating may be lower than the central government's credit for issuing local debt.

Under the guidance of local government's GDP performance appraisal, there is often a problem that "new people do not buy old accounts". Government turnover often leads to repayment risks of local financing platform loans. If local government bonds are used, the financial market is not a fool.

However, where the debt has not yet been released, it will issue its own debt.

An insurance Asset Management Co said that the source of repayment must be the most important, for example, whether the relevant local debt will indicate whether there will be any guarantee from the central government when there is a breach in the future.

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Similar to city investment debt, the source of repayment of local debt is derived from local fiscal revenue. However, whether investors will buy it depends on the pparency of the financial situation of local governments.

In the view of the above insurance companies, city investment bonds have a distribution enterprise, will announce the assets and liabilities, but at present, the local government bonds, its financial situation can achieve much pparency, this mind is not counted.

"City investment companies can apply for bankruptcy if they are insolvent, but can local governments go bankrupt once the local government fails to pay the money?"

The Rating firm believes that compared with the central government's local debt, the real local government debt rating may be lower than the central government's credit for issuing local debt.

3. whose children are there?

Is it for the current statements to be good, as far as possible to make the platform loans into full coverage, or to retain the form of platform loans?

Banks are facing choices.

A person familiar with the matter pointed out that the decision-making level believes that there are three major hidden dangers in local government debt: one is that local government debt receipts and expenditures are not included in budget management; the two is that some local governments have misappropriated project capitals and debt paying funds in large quantities; three, debt repayment is more dependent on land revenue.

According to the Audit Commission, the debt balance of local governments with debt repayment responsibility at the end of 2010 was 2 trillion and 547 billion 351 million yuan.

The "three outstanding risks", coupled with the background of the repayment of local government debt in 2011 and 2012, accounted for 24.49% and 17.17% of the background.

People in Yunnan's banking circles say that the breach of Yunnan highway is related to the appropriation of debt paying funds by Yunnan Provincial Communications Department.

After the state cancels the toll of highway two, it stipulates that the central government allocated the corresponding repayment fund to the local governments, but the agency will divert the debt repayment funds.

However, this statement has not yet been confirmed by the Yunnan communications department.

Under the circumstances of breach of contract, a person familiar with the matter said, "who's children will be embraced" has become a high-level consensus.

The first policy recommendation put forward by the Audit Commission is also "in accordance with the principle of who is responsible for borrowing, and to handle the stock debt actively and safely in different situations".

Regulators have repeatedly warned banks to be cautious about picking up the "hat" of platform loans.

At the beginning of the CBRC, it was reiterated that the enterprise law human platform loan should be restructured as a general corporate loan, and the three principles of "full coverage", "qualitative agreement" and "three party signature" must be met at the same time.

In the early days, banks looked good for performance data, and tended to rectify platform loans to corporate loans as far as possible.

When the repayment period is approaching, banks begin to reflect and face the choice. Is it for the current statements to be good, as far as possible to make the platform loans into full coverage, or to retain the form of platform loans?

"If it is retained as a platform loan, whoever has children will be held responsible by the local government."

An analyst at CICC said.