Recently, the prevention and resolution of local debt risk has become the focus of the market. Whether it is the disclosure in many places that the implicit debt resolution task is completed in excess of the quota, or the statement from the policy to keep the bottom line of local debt risk, it has brought warm waves to the urban investment bond market. In this context, analysts said that in the context of "stable growth", the debt risk in most regions will be effectively controlled, and the possibility of risk spillover is low. At this time, the strategy of sinking the qualification of urban investment bonds can obtain considerable benefits. The policy side has sent a positive signal. Recently, the positive attitude of the policy to the local debt problem has been widely concerned by the market. On February 16, Liu Kun, Minister of Finance, published an article entitled "More forceful and effective implementation of active fiscal policies", which again emphasized the prevention and resolution of local government debt risks. In his article, he stressed that we should adhere to the principle of "opening the main door and blocking the side door" to curb the increase and reduce the stock. We will improve the normalization and coordination of supervision, and resolutely prohibit borrowing in disguised form and falsifying debt. Compacting local government territorial responsibilities, focusing on cities and counties to strengthen work, and strengthening the accountability of implicit debt and information disclosure. Zhou Guannan, chief fixed income analyst of Huachuang Securities, said that with regard to the debt resolution in 2023, it is expected that on the one hand, the debt repayment period will be extended, the government financing cost will be reduced, and the debt maturity pressure will be relieved by issuing refinancing bonds to replace the implicit debt with short term and high interest rate; On the other hand, some entities or regions with poor qualifications and high debt pressure gradually promote debt restructuring and mitigate the risk of short-term debt repayment through stable negotiation with financial institutions. "At present, the policy level has taken a relatively positive attitude towards debt risk resolution in 2023, reflecting the high importance attached to debt risk prevention and control. Debt replacement and restructuring may become the focus of this year's debt restructuring work. At present, the top-down emphasis on debt issues is high, and the local government has a strong willingness to repay debt as a whole." Zhou Guannan said. In many places, the task of over-fulfilling the debts of governments in various regions is being carried out continuously and effectively. After Guangdong and Beijing announced the clearing of hidden debts, recent government work reports have mentioned the progress in resolving hidden debts. According to the reporter's statistics, a total of 7 provinces said that they had overfulfilled the debt task in 2022. Jiangsu, Henan, Shaanxi and Gansu said that they had overfulfilled the annual debt repayment plan; Tianjin said that it had completed the established implicit debt resolution task in excess of schedule, and there was no overdue default; Guangxi said that the whole region had completed more than 150% of the cumulative plan to resolve the government's implicit debt by the end of 2022. Since last year, various regions have continuously sent positive debt repayment signals and actions to the market. Yunnan Kanglv withdrew from the bond market by coordinating resources to cash bonds in advance to ensure that the debts of other entities in the region continue more smoothly. Guizhou realizes cost reduction and term extension through the extension and restructuring of non-bond debt, alleviates the pressure of short-term repayment of principal and interest, and ensures the smooth rolling of public bonds. Gansu issued a clear statement to ensure that all bonds were paid in full on schedule. "Urban investment enterprises are an important bearer of local government implicit debt, and also the main force to resolve local government implicit debt. At the same time, resolving implicit debt is also the key to reduce the debt of urban investment enterprises and reduce the risk of short-term debt
Edit：Hou Wenzhe Responsible editor：WeiZe
Source：Shanghai Securities Dairy
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