Local Bond Issuance Rate Quickening Interest Rate Negotiation By Local And Bank

The Shanxi provincial circular said that the establishment of the Shanxi provincial government bond underwriting group in accordance with the principle of "respecting the will, giving priority to underwriting ability and controlling risks" was proposed in 2015~2017, and 20 members of the underwriting group were planned to be established. On this basis, 8 leading Underwriters were identified according to the evaluation method of the main underwriters in the Shanxi government bond underwriting group.

It is understood that the issuance of bonds in Shanxi will start in June.

The announcement of the formation of underwriting syndicates announced by the Inner Mongolia finance department shows that the Inner Mongolia government bonds, including special bonds and general bonds, will be issued in installments and installments. They will choose not more than 30 financial institutions as underwriters.

A local finance department official admitted that the debt repayment pressure is great, and the replacement of local government bonds will help reduce the cost of government financing, and the cost of replacement will be reduced to around 5%.

If the interest burden of a province is around 10 billion per year, it can reduce the local expenditure pressure by issuing half of the local debt, reducing the local expenditure pressure, and also making some part of the funds for other local expenditures.

However, since

After the delay in the issuance of provincial bonds, the industry expects that local debt issuance will be fully delayed in many provinces and cities this year, mainly because the trillions of low interest rates and low liquidity government debt are hard to win by investors.

For the delayed issuance of bonds, the responsible person of the Treasury Department of the Shanxi provincial finance department said in an interview with reporters that we have learned the situation of the delay in issuing bonds in Jiangsu. "Our bond issue is still done according to the requirements of the Ministry of finance. According to the system, how much is the tender, and the interest rate issue is all marketization."

According to the Ministry of finance, the rate of issuance of local government bonds is higher than that of the same period.

However, in the context of the local debt ceiling, interest rates will not be higher.

Too much, the final interest rate level is determined by local governments and

Consultation.

Lian Ping, chief economist of Bank of communications, believes that the yield of bonds is higher enough to give appropriate returns to bank investment, or there will be a market.

However, the game between local governments and banks is still at a stalemate.

Due to the recent delay in issuing local debt, the industry generally believes that some special arrangements must be implemented through policy.

Lian Ping said, "from the current point of view, on the one hand, we need to quickly abolish the loan to deposit ratio and reduce the cost of commercial banks. On the other hand, we should appropriately reduce the deposit reserve ratio and lower the cost of debt for commercial banks, and commercial banks will also have enthusiasm to buy local bonds."

A few days ago, the Finance Department of the Inner Mongolia Autonomous Region and Shanxi issued a notice on the formation of a government bond underwriting syndicate. The Ministry of finance of Shanxi issued a notice in a "very urgent" manner. Both places requested the agencies to apply for the underwriting group to send the application materials to the finance department by May 11th.

Previously, Jiangsu, Chongqing, Anhui, Guizhou, Xinjiang, Tianjin, Hebei, Shandong and other 8 provinces and autonomous regions announced the first batch of general bonds issued in 2015 and the time limit, plus the latest provinces, at least ten provinces have entered the local bond issuance process.