"Technology Default" Stirs Up The Investment Belief Of The City Investment Market. Where Does It Go From?

Recently, the breach of a city's investment debt continued to ferment.

"Before removing the technical default of the six divisions of the Xinjiang regiment, this is the second case of overdue city investment bonds, and the market is concerned about the time when the so-called" city voted belief "is broken. In December 9th, a private agency in Beijing said.

Soon, however, the breach was also judged to be a technical default. In December 9th, the reporter of the economic report in twenty-first Century was exclusively informed that after the local government actively coordinated, the city investment bonds had been paid in succession on that day. "Technical default" has become a predictable outcome.

Although the local government has responded quickly after the overdue period, the related events have caused widespread concern in the market because of the first case of "the real breaking up of the city voted".

Breach of contract "false alarm"

After the announcement of the default of the bonds last Friday, there were many institutional analysts who would probably agree that the local government would coordinate their solution.

In December 9th, an official close to the local government said, "if it can not be actively resolved, it will also have a great impact on the local government issuing bonds later."

Prior to Guotai Junan Securities research pointed out that the possibility of greater coordination of policy. On the one hand, from the early issuance of the special debt limit in 2020 and the setting up of the Politburo meeting in December 6th, the current policy balance has been biased towards steady growth; in addition, the covert debt replacement has just begun.

In fact, although the case of city investment default is basically "technical", the non-standard product of the city investment company has long been a frequent occurrence of breach of contract.

"Including the previous Guizhou, Sichuan and many other places, there are non-standard defaults on the local government platform. Many products have been postponed after the overdue period, and even after the exhibition expires, but they are strict with the public debt, and the faith of the organization is another round of recharging." The project manager of a trust company pointed out.

Faith continues to recharge?

"Last week, two significant credit default events occurred in the bond market, namely the Peking University Founder group and the technical default city investment bonds." In December 9th, the chief receiver of a large public offering fund was interviewed. It is easy to see that the extent of the impact of the default on the market is obvious.

"Over the past four years, the Chinese bond market has gradually broken the rigid exchange of private debt, public debt, state debt and central debt, while breaking the same trade deposit and interbank deposit certificate in the interbank market. The credit market seems to be adjusting to this rhythm. But as the final belief of Chinese bond investors, the Central University bonds and the city investment bonds have remained golden, but the two companies have broken the contract this week, or the market is caught unprepared. The source pointed out.

However, for many of the agencies surveyed, city investment bonds are still worth configuring.

"Standing at the present time, the local government still needs the city investment platform to undertake the infrastructure and urban operation functions. Although the city investment platform has accumulated huge debts, the local governments' understanding of the city investment bonds has been continuously strengthened, and the investment value of the medium and long-term city investment bonds is still there." A fixed income fund of a public fund in Southern China said.

"The valuation of city investment bonds fluctuates with the policy cycle, and the center of credit spreads is also moving down. The market's belief in the city investment platform has been continuously strengthened. In addition, it is an important task to resolve the hidden debts of city investment. In the long run, it is more likely that the solution will be changed with time. This is bound to require debt interest less than fiscal growth, so the central trend of city investment bond interest rate downward. The source pointed out.

"Most of the investors in bond market are institutions, but the decision-makers behind them are also individuals, with different risk preferences. Therefore, even if the belief in the school enterprise and the trust in the city are broken, so long as there is a bad expectation, the bond market will not collapse as long as the funds of investors and investors are still there, but there will be some twists and turns in the development process. The aforementioned director of public offering thinks that.