Deep thinking on local government financing platform loans: The local government financing platform is to speed up the investment and construction of urban infrastructure, and set up one or more urban construction investment companies, urban construction development companies, urban construction asset management companies and other companies in the name of the government to guarantee financing in the name of the government, and use financial subsidies as the carrier of repayment commitments when necessary. Although the financing channels of governments at all levels are different, they will eventually invest their funds in municipal construction, public utilities and other projects. Among the funds invested in municipal and public utilities, local governments contribute by means of financial allocation, land allocation and equity transfer, and the rest mainly come from government financing platform loans.
First, local government financing platform loans: an economic phenomenon that must be highly concerned.
(1) There are a large number of loans from local government financing platforms, and the growth rate is fast. There are many financing platforms for local governments. Statistics show that there are more than 8,000 financing platforms for local governments at all levels in China. Secondly, there are a large number of loans from local government financing platforms. In 2009, RMB loans increased by 9.59 trillion yuan. Loans from non-financial companies and other departments increased by 71400 million yuan, of which short-term loans increased by 138 billion yuan and medium-and long-term loans increased by 5 trillion yuan; Because local governments mainly rely on bank loans, most of the medium and long-term loans here are invested in local financing platforms, with a total loan of nearly 3.8 trillion yuan. The proportion of local government financing platform loans to bank loans has increased, accounting for about 40% of the total new loans. In the local government financing loans
Project loans account for the majority, accounting for more than 80% of all financing platform loans, that is, the balance of project loans is nearly 5 trillion yuan.
(2) The risks of local government financing platform are becoming increasingly prominent. Local government financing platform has played a positive role in promoting economic development, but with the expansion of financing scale and the sharp increase of total loans, the risks have gradually become prominent.
The first is the government credit risk. The main economic activity of the financing platform established by the government is that the government or relevant departments are responsible for financing loans based on government credit, followed by the debt repayment responsibility undertaken by the government finance. However, the huge financing scale accumulated by such financing platforms makes the government's hidden debt burden too heavy, even completely divorced from the actual financial affordability, and the problem of capital chain breakage may occur at any time. Based on the soaring number and scale of local government financing platforms, the debt burden of local governments has increased. As far as county-level investment and financing platforms are concerned, in 2009, the new debts caused by them increased by 5 trillion yuan, and the accumulated debts over the years reached 1 1 trillion yuan. Loans from local government financing platforms have accounted for 240% of local government revenue, and the proportion of local fiscal deficit has increased.
As long as this part of the government debt is not repaid in time, it will break the normal operation of the government financing platform, affect the government credit, damage the government image, and make the government credit face great risks.
The second is capital and credit risk. In the process of cooperation with these platforms, even in the face of financing platform companies with opaque finance and asymmetric information, because they are government-supported loans, banks will increase their trust in the solvency of such financing platforms, leading to repeated mortgages, virtual mortgages and other problems, which will make bank funds
Facing greater risks. Whether local governments rely on financial repayment or land management, they can't meet the needs of debt repayment at all. Even if they violate the rules by rescheduling, the risk cannot be eliminated.
The third is the risk of social stability. A large number of loan funds poured into the local government financing platform, which crowded out the demand for loan funds of operating enterprises; Land management runs through the whole process of local government financing, and the risk of cultivated land protection increases. The red line of1800 million mu of cultivated land will face great challenges. In the period of post-crisis economic instability, once the macro economy repeatedly impacts the government finance, it will seriously affect the consumption level and employment rate of residents. The uncontrolled expansion of local government financing platform hides huge social stability risks.
(C) The local government financing platform has attracted great attention from the regulatory authorities and all sectors of society. There are many risks hidden in the local government financing platform, which has attracted great attention from the regulatory authorities and all walks of life. In July, 2009, China Banking Regulatory Commission officially issued Interim Measures for the Management of Fixed Assets Loans and Guidelines for Project Financing, to ensure that the fixed assets loan funds are really used for the needs of the real economy, to prevent loans from being misappropriated, and to strictly guard against project financing risks. In addition, it is also strictly stipulated that if a single loan fund exceeds 5% of the total project investment or exceeds 5 million yuan, it must be paid by the loan trustee, which regulates most political and trust cooperation projects among trusts, banks and governments. 20 10 65438+ 10/9 the State Council's premier Wen Jiabao presided over the fourth plenary meeting of the State Council, proposing to give full play to the role of fiscal policy in expanding domestic demand, and formulate measures to standardize the financing platform of local governments as soon as possible to prevent potential financial risks. At the same time, Governor of the People's Bank of China
At the 20 10 working meeting, the central bank pointed out that it is necessary to reasonably evaluate and effectively prevent the credit risk of local government financing platforms. All walks of life have also expressed their concerns about the financing of local government financing platforms through different forms.
Second, the debate about the economic phenomenon of local government financing platform (1) On the legitimacy of local government financing platform. The basis for thinking that the financing of local government financing platform is legal is that in March 2009, the People's Bank of China and the China Banking Regulatory Commission jointly issued the Guiding Opinions on Further Strengthening the Adjustment of Credit Structure to Promote the Stable and Rapid Development of the National Economy, which proposed "supporting qualified local governments to set up investment and financing platforms, issue financing tools such as corporate bonds and medium-term notes, and broaden the financing channels of matching funds for central government investment projects". From the perspective of commercial banks, local government financing platform is a form of financing carrier organized by local governments as investment companies and development companies with independent legal personality, which meets the requirement that a legal person can independently exercise civil liability when borrowing from banks. Therefore, the local government financing platform is based on legal persons and can borrow money from banks.
It is considered that the legal basis of local government financing platform loan is insufficient and the loan creditor's rights are difficult to claim. The essence of local government financing platform loans is the redistribution of interests between regions, and the legal basis is insufficient. Judging from the guarantee mode of government financing platform loans, a financial commitment mode represented by "bundled loans" is the government's commitment and the financial bottom. According to the law, the financial commitment of "bundled loans" is essentially a special "guarantee", and Article 8 of Chapter II of China's "Guarantee Law" clearly stipulates that "state organs may not act as guarantors, but after state affairs occur,
"Bundled loan" obviously does not conform to the category that state organs can act as guarantors. The local government's repayment in the form of financial commitment violates the mandatory provisions of the law, which is prohibited by the State Council, and banks cannot protect their own interests through laws according to the agreement. The other is the right mortgage guarantee mode with "pledge of land transfer income right" as the main way. Local government financing platform companies borrow money from banks through mortgaged property and transferable land transfer income rights. Although it is a creditor's right, the object of pledge is not specific, and it is a possible creditor's right without great certainty. According to the current law, it does not conform to the provisions of the Guarantee Law on the certainty of the object of guarantee, and it is also prohibited in the State Council, because once the object of pledge is missing, the local government financing platform company cannot repay the loan on time, the bank loan is unsecured, and the loan cannot be recovered by applying for enforcement.
(B) Risk analysis of local government financing platform. There are five main reasons for the risk of local government financing platform loans:
1. Investment and financing methods tend to be diversified.
Before 2008, the main body of most local government investment and financing platforms was one or two government departments, and government resources were scattered in various investment companies, which led to the phenomenon of competing for projects from the interests of their own departments, resulting in low efficiency in resource utilization. In addition, when the debt cannot be repaid at maturity, it can only be returned by the financial department. After that, when local governments set up investment and financing platforms, they generally emphasized that they can borrow, use well and afford from the system and mechanism. Many local governments have begun to invest, finance, project management and supervise various departments.
Is Oriental Ruihe government financing reliable?
Dongfang Ruihe government financing is unreliable, and any financing behavior will have certain risks. The key is how to prevent, dissolve and control correctly. Local government financing platform loans are reasonable, but if they cannot be effectively controlled and managed, it will have serious consequences. According to the particularity of local government financing platform loans, we should start the reform of local government financing platform which is different from ordinary credit risk products. Investment is risky, please make a careful decision.
Nie Wuyi: Preventing and Controlling the Debt Hidden Dangers of Local Financing Platforms
Nie Wuyi, Strategy Researcher of Galaxy Securities Research Institute (this article was first published in China Finance,No. 18, 20 19).
At present, the macro-economic slowdown and financial leverage reduction policy pose a severe challenge to local financing. An obvious market signal is that since 20 18, the city investment non-standard bonds have repeatedly defaulted. For more than 20 years, local financing platforms have been burdened with huge debts of the financial system (mainly bank loans and urban investment bonds). At present, the total number of local financing platforms in China exceeds 654.38 million. If the scale of urban investment debt continues to expand, there will be a debt service crisis, if the restructuring of urban investment debt can not solve the matching problem of local construction funds, nor can it solve the moral hazard problem of local governments and financial institutions, and the risk isolation between urban investment companies and projects can not be realized, then the financial and financial order and the normal operation of the capital market will suffer serious damage because of the credit crisis. Strengthening the management and control of local implicit debts, and then clarifying the management mode of local financing platforms is the focus of current risk prevention work.
Debt scale of local financing platform
The overall debt situation of local financing platforms is grim. First of all, the local financing platform debt is not only large in scale, but also insufficient in information disclosure, which also amplifies the anxiety of the outside world. Local financing platforms are vague from policy definition to centralized management, and there is no open and unified scale data so far. In 20 14, after the State Council's "Opinions on Strengthening Local Government Debt Management" (No.43 document) was issued, the Ministry of Finance organized and implemented a nationwide local debt screening, and then the relevant ministries and commissions conducted many local debt statistics, but all of them had specific caliber and uses. From the perspective of composition, the debts of local financing platforms are mainly divided into three categories: bank loans, urban investment bonds and non-standard financing. Below, the publicly disclosed urban investment bonds are studied. According to the statistics released by wind, from July 22nd to April 25th, 2008, 20 19, 15, 3 1 provincial areas (excluding Hong Kong, Macao and Taiwan) issued 13820 urban investment bonds, with a total of 2,252 issuers and a total amount of/kloc.
At present, there is no direct data on the total amount of bank loans of local financing platforms. According to the interest rate of 20 13 and 1 June, the former CBRC disclosed the bank loan balance of local financing platforms of 9.2 trillion yuan, accounting for 13.8% of the bank loan balance. The last interest I checked was disclosed at the working meeting of the former CBRC in the first half of 20 13. By the end of June 20 13, the loan balance of local government financing platform was as high as 9.7 trillion yuan. In 20 13, the former CBRC issued the Guiding Opinions on Strengthening the Supervision of Loan Risks of Local Government Financing Platforms in 20 13, and put forward the general principles of "total amount control, classified management, differentiated treatment and gradual resolution", which was implemented in April of 20 13. In 20 14, the newly revised budget law was promulgated, and the State Council issued the far-reaching No.43 document, which clearly put forward the requirement that the government financing function of the platform must be decoupled, and the functional orientation and policy environment of local financing platforms have undergone major changes. At the same time, the former CBRC will no longer release the loan balance of the financing platform. If calculated according to the principle of "total control", the wind database shows that the balance of bank loans on April 5, 20 19 is 142.6438+0 1 trillion yuan. If calculated according to the platform balance ratio of 20 13 years 13.8% (in view of the sustainable development momentum of local economic construction in recent years, the significance of bank loans to stabilize local economic construction and the credit level of local financing platforms, it can be inferred that the bank's loan review policy should be consistent with the transformation of urban investment, and the positive and negative effects can basically be hedged), the bank loan balance of local financing platforms is estimated to be 65,438+.
Non-standard financing is a financing tool with the least policy constraints, the most flexible use and the highest risk cost for local financing platforms. There are many forms of non-standard financing, including entrusted loans, credit loans, trust plans, asset management plans, private equity funds and other financing forms. At present, there is no authoritative non-standard data on urban investment. According to the audit reports of more than 960 platforms that have issued urban investment bonds and voluntarily disclosed non-standard financing, some market institutions have come to the conclusion that the amount of non-standard financing of the sample platform at the end of 20 17 is 1.65 trillion yuan, which is not comprehensive enough, leaving out the real debts of Ming shares and the debts that are deliberately avoided to be disclosed, as well as the non-standard financing of more than 8,000 small and medium-sized platforms that have not issued bonds. The non-standard scale of these undeclared platforms is generally not large. If we consider the policy repression of the new asset management regulations in 20 18, and add the missing part to 1.65 trillion, the total amount of non-standard financing of local financing platforms should not exceed 3 trillion. According to the judgment of the industry, the total proportion of non-standard financing in platform financing generally does not exceed 10%, and the non-standard scale of 3 trillion yuan should basically be within this range.
To sum up, the author can calculate that the overall scale of local financing platforms should be around 32.3 trillion (32.3=9.7 19.63), but there are other deductions, such as "issuing local government bonds to replace existing government debts" proposed by Guofa No.43, in which existing government debts should cover some of the identified urban investment debts. Among them, 3 batches of 3.2 trillion yuan were replaced in 20 15 years, of which the first batch of 1 1 trillion yuan was the part of the stock debts that local governments were responsible for repaying as of June 30, 20 15 years. It is reported that from 20 15 to 20 18, local governments issued local government replacement bonds122,000 yuan. According to the author's statistics, the bond swap will hedge the loan balance of 2065438+9.7 trillion yuan at the end of June 2003, assuming that the hedging amount is 50%, that is, 6. 1 trillion yuan. Based on this calculation, the total liabilities of the platform are 26.2 trillion yuan (32.3 trillion -6. 1 trillion yuan). From a prudent point of view, the author roughly estimates that the scale of local financing platforms is 26 trillion to 30 trillion yuan. With the continuous standardization of financing platform management and the continuous advancement of various reforms, the debt stock scale of local financing platforms will be further controlled, and information disclosure is believed to be more scientific, timely and transparent.
Thoughts on solving the debt of local financing platform
Local economic construction is an arduous task. As long as the local government's capital demand is not seriously solved, the government debt will still be transferred to the local financing platform through implicit guarantee and agent construction projects. Objectively, it is necessary to strengthen the seriousness of financial and economic order, strengthen the reform of relevant systems, and prevent local economic development from breaking through debt tolerance and affecting social and economic stability.
The most direct way to solve the debt problem of local financing platforms is to implement debt screening and replacement again. However, the most direct way is not necessarily the most appropriate way, and the order of solving problems and specific strategies will determine the effect of policy implementation. The author thinks that it is not unbearable to treat most local financing platforms, bond swap, as local government debt simply from the perspective of debt burden. According to the above calculation, the total debt of local financing platforms is 28 trillion yuan [28 = (2,630)/2], and the average maturity is assumed to be 5 years. If it is replaced in batches in five years from 2065438 to 2022, the local government debt will increase by 5.6 trillion yuan every year. On this premise, the balance of local government debt will increase to 23.99 trillion yuan (18.39 trillion yuan 5.6 trillion yuan) in 20 18, and the debt ratio of local governments in China will increase to 99.96% in 20 18, which will soon touch the internationally accepted100% ~/kloc. If the government debt balance of 14.96 trillion yuan is added, China's government debt ratio will increase to 43.26% in 20 18, which is still lower than the warning line of 60% in Europe. In terms of increment, the annual debt burden of 5.6 trillion yuan is basically equivalent to 6.22% of GDP in 20 18, which is basically equivalent to the GDP growth rate. According to this growth scale, the debts of existing local financing platforms are included in local government debts, which can be borne within five years from the perspective of the national debt burden rate. If it is extended to 10, the current debt burden will be further reduced. In addition, local financing platform debt is mainly invested in local important infrastructure and other public goods, which contributes to the sustainable growth of local economy and effectively improves local solvency. But for local governments, the debt pressure will be even heavier. Considering the differences of regional economic development level and debt level, if the central government gives appropriate subsidies, it should not obviously drag down the normal operation of local economy, but how to ensure fairness and efficiency in the operation process and prevent moral hazard will test the great wisdom of decision makers. On the basis of the above assumptions, the author believes that if the local financing platform is strictly regulated, cleaned up and reformed, the problem of the stock of urban investment bonds should be completely solved. This also shows from the side that in recent years, the central government has adopted a firm but patient attitude towards local financing platforms, which is predictable and fully emboldened. However, the problem of financial supplement for local economic construction has not been solved. If we only do bond replacement, even if the old debt will not squeeze the scale of new debt issuance, how to make up the funding gap after the local financing platform debt disappears is also a great test. In addition to local financing platform debt, local governments also have some hidden debts, which are within the overall debt tolerance range, but also close to the debt warning line. Therefore, the central government should be highly alert to local debt risks.
To solve the debt problem of local financing platforms, we can consider speeding up the reform of the financial system, rationalizing the economic relationship between the central and local governments, and solving the problem of asymmetry of local affairs and financial rights while structural reform of the financial supply side. On the other hand, only when the central and local fiscal and taxation system reforms are in place can the debt problem of local financing platforms be solved. To solve the problem of local financing platform, we must take the unification of administrative power and financial power as an important starting point. On the premise of clarifying the central and local affairs and financial power, we should either subtract the local affairs and financial power, or increase the local financial power, or both.
To solve the debt problem of local financing platforms, it is ultimately necessary to reform the local investment and financing system. For local infrastructure construction and social service projects that are quasi-public welfare and have the characteristics of charging projects, after all, there must be independent market entities responsible for construction or long-term operation. For urban investment enterprises with actual market operation ability, independent operation and self-financing, there is still social space and economic value to continue to exist. It is suggested that local governments and non-governmental infrastructure industry companies should carry out mixed ownership reform of urban investment companies with operational foundation and management ability, improve corporate governance structure, strengthen self-restraint mechanism of enterprises, increase registered capital and enhance debt tolerance, and truly become the leading force of local quasi-public investment. It is necessary to establish not only a local investment system, but also a local financing system. For example, we can fully learn from the functional design of China Development Bank, build a managed and efficient local financial institution, and be responsible for policy financing services in the region, including major regional infrastructure construction projects, cross-regional construction projects, quasi-non-public welfare local projects, etc. In the future, when implementing a proactive fiscal policy, local governments can quickly obtain financing through local development banks, which can not only ensure the scale and efficiency of financing, but also fully guarantee the central and local governments to accurately grasp the scale, structure and quality of local investment and effectively control the transmission and spread of economic risks.
Strengthening the prevention and early warning of major risk events and finding and resolving systemic risk hidden dangers in time are important starting points for solving deep-seated contradictions in the current economic field. Although there have been different views and disputes in the economic circles on how to understand and solve the problem of local financing platforms, it is precisely because of the firm, rational and patient guiding policies adopted by the central government that local financing platforms have not become a problem asset that has dragged down China's economy, but have played an important role in promoting new industrialization and urbanization. On the whole, the risks of local financing platforms are currently in a relatively controllable range. As long as the follow-up standardized management and disposal measures are decisive and appropriate, the debt increment is resolutely controlled, the debt stock is actively resolved, and then the reform of the fiscal and taxation system and the investment and financing system is comprehensively promoted, the transformed local financing platform can still play an important role in the future economic construction.
Author: Galaxy Securities Research Institute
Provisions on financing loans of government platform companies
Legal analysis: In view of the rapid growth and potential risks of corporate credit in government financing platforms, the CBRC has put forward regulatory requirements: it is forbidden to issue bundled loans, strictly investigate, evaluate, approve and lend money item by item, and it is forbidden to sign large-sum credit cooperation agreements with local governments without specific projects, and those that have been signed may not be implemented; Combined with the solvency of local governments, strengthen the evaluation and control of the repayment ability and loan risk of financing platforms; Generally, the term of the project loan shall not exceed the project construction period plus 65,438+05 years, and the longest term shall not exceed the project construction period plus 65,438+05 years; Bridge loan can only be used for non-productive projects, and it is strictly forbidden to issue bridge loan to productive projects; After the original planned funds are in place, the principal and interest of bridge loan shall be returned, and preferential interest rates shall not be given, nor shall they be occupied for a long time, nor shall they be used as project funds.
Legal basis: Measures for the Administration of Loans from Local Government Financing Platforms of Commercial Banks Article 4 Local government financing platform loans refer to loans that are mainly borrowed by local government financing platforms, but are still managed by platform loans because they do not have commercial operation conditions for the time being. (hereinafter referred to as platform loan)
Is it reliable to lend money to the government for financing?
Reliable. For organizers, the financing channels of the project include domestic government's linked capital, private sector lending institutions, export credit, development banks and insurance institutions, international financial institutions and project customers. Government financing is a variety of sources of project financing.
1. The host company undertakes all the financing of the project. If the company's own funds are limited, it must first obtain the support of domestic funds. Government financing includes domestic government financing and domestic bank financing. Part of China's fiscal revenue was used to expand investment in reproduction, and the government financing was changed from the past free allocation to loans, which enhanced the organizers' awareness of funds and risks.
2. In fact, the finance of many western countries also provides funds for the construction of large-scale projects, such as railways, mines, airports and large enterprise projects. 0 Germany 100% of posts and telecommunications and railways, 95% of ports and power supply projects, highways, river transportation and aluminum smelting, the state has given great financial support. In developing countries, due to limited fiscal revenue, some large-scale projects financed by the government are short of funds, and most of the funds have to be financed from the international market. The proportion of government financing can be as high as 3/4, and its own funds only account for a small part, but this part has also become an important supplementary fund for the project sponsors and a part of the government's hope for paid loans.
From the perspective of capital demand:
1, the government financing platform is naturally similar to Ponzi scheme, which can only be maintained by continuous lending and cannot afford to reduce exposure.
2. Since Circular No.43, the overall control of bank trust on government financing platform credit is relatively strict, so it is not so easy for the government to borrow money directly from banks.
3. A large number of prefecture-level cities and most counties with average economic strength do not have the ability to replace the liabilities of financial institutions through national debt for the time being.
Summary: The government (especially the county-level government with general economy) still has a strong financing demand.
From the perspective of capital supply:
1, the economy is depressed, and the manufacturing industry (especially private enterprises) is in a state of tight cash flow. Many manufacturing leased assets in the hands of leasing companies are rising after the deadline, and the non-performing rate is rising.
The economic situation is so bad that banks lend in succession. Leasing companies do not want to be long-term debt supporters, and they have stopped lending to manufacturing and private enterprises, making it difficult to continue new business.
3. After the leasing company's surviving business expires one after another, the company's total assets decrease, normal assets decrease sharply, the proportion of remaining concern and non-performing assets increases, and the capital adequacy ratio decreases, which not only affects the bond issuance rating, but also affects the company's long-term development.
The introduction of the risk of government financing platform loans and the risk supervision of government financing platform loans come to an end. I wonder if you have found the information you need?