Central Bank Seeks Local Financing New Path &Nbsp; Local Debt Or Restart

In the wake of the nationwide turmoil in clearing local government debt, the central bank's intention to establish a local financing risk hedging mechanism has also been gradually clarified. In June 1st, according to the relevant sources of the CBRC, the regulatory authorities were prepared to clean up 2 trillion to 3 trillion yuan of local government debts that might default, transferring part of their debts to several newly established companies and lifting the restrictions on the sale of bonds by provincial and municipal government agencies. The central government will step in to repay part of the bad loans. The bank will bear some losses. Meanwhile, it will open the development projects that originally restricted private investment to private investors.

Marketization financing New path

"The debt pressure of the local government financing platform is increasing and the risk is constantly accumulating. From the perspective of financing mode, this pressure is entirely borne by the central bank. Therefore, on many occasions, the intention of the central bank is to make changes in the financing mechanism so that local governments can finance other ways, rather than just on the loan of the local government financing platform. CBRC stakeholders told the daily economic news reporter that the central bank is also exploring ways to reduce pressure for local government financing platforms, which not only guarantee the financing of local governments, but also prevent risks.

In April of this year, Zhou Xiaochuan, governor of the people's Bank of China, was at Tsinghua University's financial high end forum. Disclose We hope that local debt issuance will replace local financing platform for local financing. "Rather than allowing local governments to borrow in disguise, it is better to allow them to issue bonds, while the financial market is pricing them and determining risks."

Liu Yuhui, director of the China economic evaluation center of the Financial Research Institute of the Chinese Academy of Social Sciences, told reporters in the daily economic news that lifting the restrictions on the sale of bonds by provincial and municipal government agencies is an important step for the central bank to establish a risk hedging mechanism for local government financing platforms, and it helps local governments to raise funds from a single bank credit to the market. "In the data of local financing platform loans released last year, the proportion of loans that banks had serious problems accounted for 23% of the total commercial loans, totaling 1 trillion and 770 billion. Now the risk of this part of the loan funds is all in the central bank. From the perspective of risk and self decompression, it is necessary for the central bank to disperse the main body of risk.

Liu Yuhui believes that the Marketization Mode will be the main outlet for local government financing in the future. The restatement of the issue of local debt will undoubtedly illustrate this point. In the process of marketization, if institutions or families want to buy government bonds, they need to take out real gold and silver, which will prompt the sunshine and transparency of local government financing. On the contrary, for local governments, it is also necessary to receive funds for financing. market Supervision and restriction.

"In addition, from the efficiency of capital utilization, the way to clean up the loan of local government platform through packaging and stripping is higher, and it is better to take the market approach." Liu Yuhui said that there are indications that at least the central bank is trying to make new paths for local government financing.
 

Local debt instead of platform loan?

In the eyes of the relevant authorities of the bank, the new path of market oriented financing of local government financing needs to face many problems. In the short term, local debt can not replace platform lending.

"In ICBC's local government loans, there are three main conditions: financial strength, government level and repayment capacity. From the distribution of loans, ICBC has a relatively large number of loans to the municipal government, especially the policy oriented economic development zone, similar to the Tianjin Binhai New Area. ICBC stakeholders in an interview with the daily economic news reporter said that since 2008, ICBC has been cautious about lending to local financing platforms, most of which are doing some infrastructure construction loans with relatively low risk.

For the local government loans to take the path of marketization, the ICBC stakeholders believe that many details will be involved. "Once the local debt is opened, it may be that the local government will sink into the situation of unlimited bond issuance. This is a factor that must be considered."

At the same time, he also believes that the sale of local debt for families or the interbank market is undoubtedly a key issue. From the current market, it is not very realistic to issue such bonds to families, because the family's ability to access information is far less than that of banks. It is better to sell local debt to households in the inter bank market. "However, in the banking system, the income from buying local debt is far less than that of lending. From the point of view of revenue, banks will not be willing to buy such bonds.

He told reporters that the ratio of bank loans to bank funds is 80% to 90%. If 10% of loans are converted into bonds, it will double the size of the current bond market. At present, this possibility is not high.

Another industry insider told reporters that in terms of local government platform loans, banks are cautiously optimistic. Compared with previous bank lending risks, the risk of local government financing platform loans is controllable. At the same time, the government's credit is relatively reliable, the risk is implicit, and the corresponding assets are mortgaged, so it is also regarded as "fragrant meat and potatoes" by banks.

The source said that when the local government was lending, it was not the government seeking the bank, but the bank lending to the government through marketing. "Someone in the bank often jokes," the loan is drunk with wine. "

"Local debt may ease the local government's tight financial situation, but how to operate it involves many countries, local governments and banks." The person believes that in the short term, local debt instead of local government financing platform loans will not be widely promoted.