200 Billion All Local Debts Remain In The Second Half Of The Year.

The Ministry of Finance pointed out that "high and low before" is a relatively uniform judgement of Chinese scholars and officials on this year's macroeconomic trend. Under such a judgement, the issuance of 200 billion local debt in the second half of the year can serve as a supporting means to the economy, and the issuance of the first half year will only make investment more overheated.

As of June 11th, 200 billion of the local debt in 2010 had not yet been issued. In the same period last year, 200 billion of local debt has been issued more than 70%.

"The local people's Congress has passed and is now queuing up in the Ministry of finance." Guangxi finance department official said.

Due to the overheated local investment in the first half of the year and the provision of "sufficient ammunition" for the second half of this year, the approval of local bonds this year is more stringent than last year. "This year, the Ministry of finance will approve the use of the quota issued by the local government by the budget department and the Ministry of construction," he said. Yunnan finance department official said.

However, market participants and local financial officials believe that the opening date of local debt is approaching in 2010 and is likely to start in the second half of July or July. {page_break}

Prevent overheating

For the 200 billion local debt in 2010, many securities institutions originally predicted that most of them would be issued in the first half year. At the end of March, the second quarter treasury bond financing conference also heard news that the local debt issue was launched in April and was issued in the first half of the year. But so far, the Ministry of finance has not announced any local debt issuance plan.

In early June, the Ministry of Finance issued the notice on the bidding and examination rules for local government bonds in 2010, and asked the members of the Treasury bond underwriting group to report the accounts receivable account of local government bonds before June 4th.

According to the model of last year, the Ministry of Finance announces the size of local debt to be issued in half a month. Therefore, some local financial department officials believe that the fastest 6 months of local debt will be opened in the second half of the month, and most likely it will be issued in July.

"The Ministry is issuing when considering the low market price, so the cost is low. In addition, we must look at the macroeconomic situation." Guangxi finance department official said.

In the first half of the year, the central bank raised the deposit reserve ratio and interest rate, and the bank loans were affected. Under the tight monetary policy, the interest rate of the bond market continued to rise, making the cost of issuing local bonds higher. This is an unfavorable opportunity for the local government with great difficulty in repayment.

At present, the market has two expectations for the second half of the economy. Under this expectation, monetary policy will expand moderately in the second half of the year, when bond market interest rates will stabilize and local debt can be issued by machine. The economic data released in May have declined.

Liu Shangxi, deputy director of the Research Institute of the Ministry of finance, said that "the former is high and the latter low" is a relatively uniform judgement of Chinese scholars and officials on this year's macroeconomic trend. Under this judgement, the 200 billion local debt issued in the second half of the year can serve as a supporting means for economic development, and the issuance in the first half of the year will only make investment more overheated.

The Finance Department of Henan said that this year's regulations on the use of local bonds are extremely strict, and can only be used for supporting and building projects of central projects, and are not allowed to be used in new projects. This also confirms that the Treasury is worried that local debt will overheat investment.