Overview
Significant risk performance of urban investment industry in 2021 under the tightening of financing policy
In 2021, the issuance and net financing of urban investment bonds are still at a high level, but the growth rate has declined. In 2021, the issuance amount of urban investment bonds was 5.80 trillion yuan, a year-on-year increase of 23.29% over 2020, and the growth rate decreased by 6.24 percentage points; In 2021, the net financing of urban investment bonds was 2.00 trillion yuan, a year-on-year increase of 2.69%, and the growth rate decreased by 48.11 percentage points.
The proportion of direct financing of urban investment enterprises has increased, and the purpose of fund-raising is mainly to repay interest bearing debts and borrow new to repay the old. By the end of September 2021, the proportion of direct financing of urban investment enterprises in the total financing channels had increased from 24.76% at the end of 2020 to 25.62%. According to the public disclosure of urban investment bonds for the purpose of raising funds, the purpose of the funds raised by urban investment bonds in 2021 is mainly to repay interest debt and borrow new to repay old, accounting for 60% and 24% respectively, accounting for 84% in total. Since May 2021, the proportion of raised funds used for fund-raising projects and supplementary working capital has fluctuated and decreased.
The proportion of issuance in the exchange market decreased significantly, and there were many cases of termination of issuance by district and county-level platforms. In 2020 and 2021, the issuance proportion of urban investment bond exchange was 36.58% and 34.45% respectively. In 2021, the audit of 332 urban investment bonds was terminated, involving 266 urban investment entities and the planned issuance amount of 445 billion yuan. All of them were corporate bonds, of which public bonds accounted for 26.09%. From the perspective of termination of issuance, the most affected enterprises in the tightening of policies in 2021 are district and county-level urban investment enterprises, including 190 district and county-level platforms, accounting for 71.43%.
While the stock balance of urban investment bonds reached a record high, the interest bearing debt of urban investment enterprises also continued to grow. While local governments promote the resolution of implicit debt, the interest bearing debt of urban investment enterprises continues to grow. By the end of September 2021, the balance of interest bearing debt of urban investment enterprises was 49.30 trillion yuan, an increase of 10.08% over the end of 2020; Over the same period, the balance of national urban investment bonds was 12.62 trillion yuan, an increase of 13.97% over the end of 2020.
Non standard risks are concentrated in areas with weak economy and finance and high debt risk, and there is a diffusion trend in the near future. From 2017 to 2021, a total of 568 non-standard risk events occurred in 24 provinces, autonomous regions and municipalities directly under the central government, involving 278 urban investment enterprises, including 178 regional and county-level entities, accounting for 64.03%. From the perspective of regional distribution, the top three provinces in terms of the number of risk subjects in 2021 are Guizhou Province, Yunnan Province and Inner Mongolia. Most of them have weak economic and financial strength and great local debt pressure. In 2021, non-standard default events of urban investment appeared for the first time in Shandong, Gansu and other places, reflecting the diffusion trend of non-standard risk events.
In 2021, the negative public opinion of urban investment enterprises increased significantly, and the rating actions increased accordingly. In 2021, the negative public opinion of urban investment enterprises is mainly divided into four aspects: corporate governance, business early warning, debt early warning and supervision, and the number has increased significantly. Based on this, since 2021, rating agencies have also taken many rating actions, mainly including grade reduction, negative adjustment, outlook, etc.
Sorting out the relationship between government and enterprises and adjusting the thinking of rating under the dissolution of hidden debt
The legal boundary between local government debt and urban investment enterprise debt has been drawn, but the actual repayment boundary has not been fully clarified. Taking the new round of implicit debt audit of the National Audit Office in 2018 as the boundary, the formal relationship between enterprise operating debt and local governments has been clarified, but there is still a high degree of correlation with local governments. In the future, we need to focus on the repayment responsibility and willingness of local governments to enterprise operating debt.
The essence of urban investment transformation is to peel off the government financing function. The transformation is not "transformation", but the transformation of business model and business type. The transformation of urban investment is the transformation of business model and business type. In the process of urban investment transformation, the dependence between urban investment enterprises and local governments will change, and the willingness and degree of local governments to support different types of urban investment enterprises will also be differentiated.
Rationally treat the "urban investment belief" and further strengthen the individual credit strength of urban investment enterprises. Under the background of "controlling hidden debt, preventing risk and adjusting structure", the relationship between local governments and urban investment enterprises will show multiple and complex changes, and the risk characteristics of urban investment individuals will also tend to be market-oriented and diversified. Therefore, it is necessary to treat "urban investment belief" rationally, Based on the original logical method of urban investment rating, the risk of urban investment enterprises is analyzed and judged from a more dynamic perspective.
The policy pressure continues, and we need to pay attention to the five risks of the urban investment industry in the short term
Risk 1: pay attention to the impact of regional debt risk control on the refinancing of urban investment enterprises. In terms of financing policies in 2021, the regional debt situation has become an important reference factor for the regulatory authorities to restrict the issuance of bonds by urban investment enterprises. This trend is expected to continue in the short term. Therefore, the future effect of regional debt risk control directly determines the refinancing environment of urban investment enterprises in the region.
Risk 2: pay attention to the impact of strict real estate regulation on regional debt resolution and urban investment enterprises. Land finance is the "second finance" of local governments in China. Under the environment of continuous downturn in the land market due to strict regulation and control of real estate, attention should be paid to the regions with high dependence on land finance, the source of funds for dissolving hidden debts, and the impact on the business collection and capital liquidity of urban investment enterprises.
Risk 3: pay attention to the complexity and variability risks brought by the transformation of urban investment. Under the tone of "controlling the increase of hidden debt into savings", the transformation of urban investment is imperative. The transformation process of urban investment will continue to bring more complex and variable risks to urban investment enterprises. In particular, the transformation of urban investment enterprises to non urban investment related business superimposes the risks of other industries on the basis of the original urban investment risks, and the uncertainty factors increase significantly.
Risk 4: pay attention to the refinancing risk of district and county-level urban investment enterprises. We need to pay attention to the future debt continuation of district and county-level urban investment, and whether the local government will make a more effective adjustment to the future development of these urban investment enterprises, including the combination between regional platforms, the integration of district and county-level platforms at the municipal level, and the "new bottled old water" of enterprises involving implicit debt, Whether there is "room for maneuver" for district and county-level platforms to truly and continuously combat risks.
Risk 5: pay attention to the risks transmitted to urban investment enterprises across regions and industries. Paying attention to the transformation and integration of urban investment, the strong support of urban investment for industry, the increase of industrial investment scale, and the increase of the proportion of external guarantee, including mutual guarantee between platforms, guarantee for investment promotion projects, guarantee for private enterprises, all make the risks of urban investment enterprises more overlapping and complicated, resulting in new characteristics of risks in the urban investment industry in the future, That is, the risk of cross regional and cross industry transmission.
