How hot is the "new infrastructure"? Urban investment to increase the size of the march, bank credit easing still guard the "red line"

"Now the policy level to marginal easing." A prefecture-level city in the central provinces of urban investment financing minister on March 26 to the 21st Century Business Herald reporter frankly said, "We have a hospital construction project did not even look for A big bank, the information is not given to this big bank, but they look at the other banks to us approved the project loan, they also approved the loan for this project. We gave feedback that a bank had already approved it, and that they wouldn't necessarily use your family's funds when the time came. They replied that it's okay to see if they want it at that time."

To some extent, this reflects the current warming investment and financing situation. Under the impact of the epidemic, macroeconomic downward pressure has increased, infrastructure investment is seen as an important tool to stabilize growth.

The 21st Century Business Herald reporter learned that, with the improvement of the epidemic, infrastructure projects continue to start, and some of the city investment has increased the project plan. According to changes in the situation, some city investment and even declared a new infrastructure category category of projects.

In the financing end, in addition to the three major policy banks, the recent state-owned banks have also increased financial support for major projects, loans for major infrastructure projects have relaxed. For example, the capital ratio of the project can be implemented in the industry's minimum capital ratio; project procedures are not complete, can also issue part of the preliminary loan. Its logic lies in the impact of the epidemic in the residential sector new loans fell, the bank lack of high-quality assets.

Entering the new infrastructure projects

City investment is still the important main body of infrastructure investment. As the epidemic improves, infrastructure projects continue to start.

"Under normal circumstances, after the sixteenth day of the first month construction workers are rushed to resume work across the country, so the impact of the epidemic on the infrastructure sector is not particularly large. mid-March construction site resumption rate has reached 80%, to the end of the month will reach 90% of the resumption rate of the workers to the post rate is relatively high." A source from a municipal urban investment company in east China province said.

Traditional infrastructure projects are still the focus of urban investment companies. The vice president of a county urban investment company in central China's provinces said projects under construction were still somewhat affected during the epidemic. At present, the company's investment program is steadily completed, mainly some of the previous legacy of road network construction, supporting infrastructure construction. But the financing plan will increase compared with the previous year.

The former director of the financing department of the city investment in prefecture-level cities in central provinces introduced that, taking advantage of the current policy shift to relaxation, the company declared some projects, mainly in the field of warehousing and logistics. "The original such projects are not good financing, but now the policy encourages, the project is easier to finance, but we will also avoid the investment scale to increase more, after all, in the end also need the company to find a way to pay off the debt."

Recently, a number of high-level meetings said to increase the intensity of new infrastructure. For example, a meeting of the Standing Committee of the Political Bureau of the C*** Central Committee held on March 4 emphasized accelerating the construction of major projects and infrastructure that have been clearly defined in national plans, and speeding up the progress of new infrastructure construction such as 5G networks and data centers.

Some urban investment companies also plan to enter the field of new infrastructure. 21st Century Business Herald reporter obtained a county in Hebei City Investment project program shows that the county requires planning and packaging of a number of "to the upper can declare, external can attract investment, can be implemented internally" of the project, the county City Investment declared two projects.

One of these projects is the construction of a social welfare retirement center, and the other is a 5G communications and digital industrial economy project. The latter belongs to the category of new infrastructure, with an estimated investment of 1.25 billion dollars, and is to apply for financing through the CDB. The project is specifically for the construction of all 5G base stations and communication networks, data centers and big data industrial parks in the county, as well as the application of 5G in smart cities, industry, agriculture and transportation.

Sources from a municipal urban investment company in South China said it is currently working on a smart city project, which includes more than 10 sub-projects such as a cloud computing center, a comprehensive social governance center and a big data resource center. "The whole construction cycle will take about 11 months, and construction has already started in August last year." The source said.

"The new infrastructure in the wake of the epidemic is a hot-spot hype, not a technical level of thinking. Urban investment companies are better and more familiar with the old infrastructure, but not familiar with the new infrastructure, the future of the project how to operate, how to profit is a test." Northeast region, a district and county investment and financing center responsible person confessed.

Marginal easing of bank lending

Financing for infrastructure projects has also picked up. "After the outbreak, branches of the three major policy banks and the Provincial Development and Reform Commission jointly issued a document requesting the promotion of financing in the field of major projects. since mid-March, several branches of large state-owned banks have also issued similar documents." A large state-owned bank branches in the northern provinces of the head of the corporate department said.

Documents obtained by the reporter show that in late February China Development Bank, Agricultural Development Bank and Export-Import Bank set up special funds of 60 billion, 30 billion and 30 billion respectively to support the construction of key projects in the province and the financing needs of medical material enterprises.

And by mid-to-late March, local branches of large state-owned banks joined the ranks. CCB, ICBC and ABC together set up a 170 billion yuan special credit fund to cope with the epidemic and promote the resumption of work, to support the construction of key projects in the province and major projects to prevent and control the epidemic.

Of these, project loan conditions have been relaxed. For example, the financial services program of a major bank said that for some key projects with incomplete formalities, a pre-project loan of no more than three years can be approved in accordance with 30 percent of the total project investment. The program also said that priority support for the construction of roads, railroads, urban rail transit, electricity, gas and other key projects in the field of infrastructure, project capital to implement the industry's minimum capital ratio.

The so-called capitalization system, that is, investors in accordance with a certain percentage of the total investment to pay their share of the contribution, the remaining part of the investment project funds to the registered capital as a guarantee, by the investment of legal persons facing the community through the means of financing.

November 13 last year, held a regular meeting of the State Council proposed to fill the shortcomings of the highway, railroad, urban construction, logistics, ecological and environmental protection, social and livelihood aspects of the infrastructure projects, in the investment return mechanism is clear, reliable, risk-controllable under the premise that the minimum proportion of capital can be appropriately reduced by no more than 5 percentage points (previously 20%). In other words, if the highway, railroad and other projects to meet the above requirements, the capital ratio can be as low as 15%.

A person from the credit department of the head office of a joint-stock bank admitted that under the capitalization system, less of the enterprise's own funds means more debt financing. "It's similar to buying a house, the down payment payment is less, the bank loan risk is naturally greater."

Analysis shows that banks are increasing credit investment in infrastructure projects, on the one hand, to follow the policy changes to find a new business direction; on the other hand, it is (affected by the epidemic) the contraction of residential lending, there is an urgent need to increase the strength of the public loan investment. Central bank data show that in February, RMB loans increased by 905.7 billion yuan, of which the household sector loans decreased by 413.3 billion yuan, enterprise (business) unit loans increased by 1.13 trillion yuan.

"Bank funds are more supportive of sheltered housing projects and rail transit projects. Recently affected by the epidemic, the state encourages large infrastructure projects, financing further relaxation." The former East China province municipal urban investment company sources said.

The former director of the financing department of prefecture-level city investment in central China's provinces said that this year, it will take advantage of the expectation of marginal easing of policy to apply for more debt issuance quota, while pushing forward the rollover and replacement of hidden debt. "Now is still try to protect the stock of debt service, new projects and financing will be appropriate control. For one thing, now the local financial allocation of funds to pay back the company's interest is difficult, if the increase in debt, the future or the company itself to find a way to pay back; secondly, there may be a risk of new hidden debt."

No new hidden debt is still a loan "red line". The aforementioned financial services program of large banks also said, (credit investment) to strictly implement regulatory policies, to not add new local government hidden debt as a prerequisite for proper arrangements in the Ministry of Finance hidden debt list of debt resolution, strengthen the region, project selection, optimal replacement.

(Edited by Lin Hong)