After years of rapid development, Urban Investment has many problems. Recently, a certain municipality in Jiangsu required municipal state-owned enterprises and state-owned enterprises in districts and county-level cities to prepare a "financing cost reduction plan" to reduce stock debts with interest rates exceeding 10%.

This is not the first time a similar situation has occurred in Jiangsu Province. As early as March 2020, the Yancheng State-owned Assets Supervision and Administration Commission issued the "Notice on the Work Plan for Debt Financing and Settlement of Reporting Costs Above 8%", requiring municipal enterprises to set a cost of 8%. The above financing clearance work plan, and requires that the clearance work be completed before the end of the year in principle.

In addition, in the "Guiding Opinions on Regulating Investment and Financing Behaviors of Financing Platform Companies" issued by Jiangsu Province in May 2021, it is also mentioned that local governments should focus on changes in regulatory policies for non-standard products and guide financing platform companies to gradually reduce trusts. , Asset management plans, financial leasing, private equity funds, and the scale of various non-standard products issued in local trading venues. All financial management departments should guide financial institutions to cooperate in the replacement of high-cost, short-term, and difficult-to-continuable stock of non-standard debts in accordance with regulations.

These measures are not only aimed at reducing the cost of borrowing, adjusting the debt structure, and preventing debt risks, but also showing that the idea of borrowing by the city has been completely changed:

Stable borrowing of the new and repaying the old, no longer borrowing to invest

Regarding the current urban investment and financing, the regulatory attitude is very clear; in addition to guaranteeing the financing of borrowing the new to repay the old, the new debt, especially the open market credit debt, will be strictly monitored. The signal revealed in it is very clear. In addition to stabilizing the current debt rollover, Urban Investment no longer supports new projects through financing.

This means that at a time when financing functions are greatly restricted and financing costs continue to rise, most urban investment companies must change the traditional debt-investment thinking; avoid mismatching debt and investment maturity, poor investment project benefits, and occupying more cash flow, etc. Factors further expand the debt risk of Urban Investment.

At the same time, this also means that the traditional self-investment model of urban investment will be greatly affected; the good days of urban investment relying on government credit to obtain financing and then autonomous control will also become a thing of the past. After all, judging from the actual situation, the urban investment that has not yet been transformed and has been heavily administrative does not reflect the high efficiency of corporate investment. It is very necessary to control the impulse of urban investment to raise debt.

Turn to project financing and end the idling of funds

Since the gradual tightening of urban investment financing, we will find that various directional special corporate bonds have become a "green channel" in financing; from epidemic prevention and control bonds, carbon neutral bonds, new-type urbanization bonds to the recent rural villages The revitalization debt is like this.

The root of this trend is that supervision hopes to strengthen the management and control of urban investment projects; it urges urban investment to further improve investment efficiency and spend money where it should be spent. Moreover, these special bonds all require "special use of funds and targeted investment"; the project itself must meet the "requirements of self-balancing of funds", and repay the principal and interest of the project through project income, so as to avoid further aggravating the debt burden of urban investment due to project investment.

This is not only a move to promote the transformation of urban investment, in essence, it also urges urban investment to operate idling, which has existed in the past and relied on financing funds, and gradually shift to a healthy state of repaying principal and interest through project output.

Digest accounts receivable and curb hidden debts

Since 2018, the fiscal system has been undergoing systematic transformation and reform; among them, the hidden debts and debt risks that widely exist in local governments are the most focused regulatory focus.

A considerable part of the hidden local debt is in the form of urban investment stock debt; a large part of it is due to the fact that the government has allowed the urban investment to build government investment projects without a fiscal budget, thus forming A large number of accounts receivable for finances. Moreover, since these projects are ultimately invested in public welfare projects within the scope of government responsibility, and are supported by local agent construction management methods, it is very clear that the resulting debts are hidden debts.

Therefore, for urban investment and local finance, the key to solving the problem of urban investment is to resolve hidden debts. It is to digest the accounts receivable between the government and enterprises, so that the government's hidden debts are further exposed to the sun and through the fiscal system. Policy tools are replaced or repaid. After deepening the budget reform, the debt problem within the government's responsibilities should no longer be borne by Urban Investment.

Standardize business operations and eliminate gray space

Under the general trend of fiscal reforms, it is only a matter of time before the city is undergoing a new round of transformation; however, among the many factors that have plagued the city's transformation, administrative intervention accounts for a large proportion. Although the characteristics of urban investment companies determine the deep connection with local governments, the boundaries between government and enterprises still need to be controlled and grasped; excessive administrative intervention not only affects the normal operation of enterprises, but also creates widespread financing benefits transmission and gray space problems .

In fact, the problems of local debt and urban investment and financing have long been the focus of supervision by the Commission for Discipline Inspection; since 2020, many local officials and urban investment leaders have been dismissed due to the problem of the transfer of financing benefits. In some areas with higher financing costs, the existence of such problems can be widely seen.

Keywords: infrastructure construction, infrastructure construction, domestic engineering news, infrastructure engineering news

The era of urban investment blindly borrowing and disorderly investment has passed. Therefore, cutting high-interest financing and adjusting the debt structure is not only to promote the further transformation of urban investment and gradually get on the right track of healthy operation; it is also to reduce administrative intervention and eliminate the gray space in the process of urban investment in borrowing. Today's urban investment approach to borrowing has completely changed. Editor/Xu Shengpeng