Up to 175.3 billion yuan, 15 provinces and cities disclosed new quarter local bond issuance plans. The progress of new bonds in the first three quarters was slower than the same period last year, and special refinancing bonds are expected to become the focus of the fourth quarter.
According to incomplete statistics from reporters of the “Daily Economic News”, so far, at least 15 provinces and cities have disclosed their plans for the issuance of local bonds in the fourth quarter. Among them, Beijing, Hunan, Chongqing, Hainan, and other places focused on refinancing bonds. Hunan Province, in particular, plans to issue 175.3 billion yuan of local debt in the fourth quarter, ranking first among the disclosed local issuance plans.
The increased focus on refinancing bonds in the fourth quarter can be attributed to three main reasons. First, new bonds have already been issued in the first three quarters, especially since the third quarter, to meet the pressure of stabilizing growth and the Ministry of Finance’s requirement to complete the issuance of new special bonds by the end of September. Second, there is still high maturity pressure in the fourth quarter, with over 400 billion yuan of local government bonds due, making the issuance of refinancing bonds crucial for debt repayment. Third, the issuance of special refinancing bonds will resume in the fourth quarter as part of the “debt package plan” to repay existing debt.
Yuan Haixia, executive director of China Chengxin International Research Institute, predicts that there may be over 400 billion yuan in new bonds issued in the fourth quarter of this year. Compared to last year, the issuance pressure will be higher, but the pace of issuance may be smoother. Additionally, the issuance of new bonds by various provinces in the fourth quarter will stay within the annual new limit, with the special debt balance limit mainly used for issuing special refinancing bonds to repay existing debt.
The focus on issuing local government bonds, especially special bonds, in the first three quarters is due to the need for quick funds to support economic growth and achieve development goals. The Ministry of Finance sets deadlines for the issuance of special bonds, with this year’s issuance required to be completed by the end of September. Yang Haiping, a researcher at the Securities and Futures Research Institute, emphasizes the importance of special refinancing bonds and how they differ from special bonds used for project construction.
In the first three quarters, a total of 7.07 trillion yuan of local bonds were issued, marking an 11.31% increase compared to the same period last year. However, the progress of new bond issuance was slower than last year, with only 87.27% of the annual limit completed. The scope of special bond support and the areas that can be used as capital have expanded, including projects such as urban village renovation and tourism.
Overall, the focus on special refinancing bonds and the slower progress of new bond issuance in the first three quarters indicate the importance of debt management and repayment for local governments. As the fourth quarter begins, provinces and cities will be implementing their local bond issuance plans while keeping in mind the need to address debt maturity and economic growth.