On September 28th, the Investment Bank Infrastructure Fund announced that it had completed the task of putting in 50 billion yuan of funds. so far, the second tranche of 300 billion infrastructure funds participated by three policy banks has been completed. At the same time, the special debt balance limit of more than 500 billion yuan also ushered in the "opening of the gate" a few days ago. According to the requirements of the executive meeting of the State Council, the special debt balance limit should be completed by the end of October.

Experts interviewed by a reporter from the Securities Times said that the special debt balance limit of more than 500 billion yuan is expected to enter the infrastructure sector in the fourth quarter and bring about 350 billion yuan of successor funds for infrastructure projects, thus helping to maintain the growth rate of infrastructure investment at about 10% for the whole year.

The second batch of policy development

Accelerate the release of financial instruments

Compared with the 58 days from the establishment to the completion of the first batch of 300 billion policy development financial instruments, the second batch of policy development financial instruments once again ran out of "acceleration" from capacity expansion to landing. As of September 28, the executive meeting of the State Council announced that the new quota for policy-oriented development financial instruments had reached 300 billion yuan.

As the newly added main body after the quota expansion, the Export-Import Bank established Jinyin Infrastructure Fund Co., Ltd. on September 2, and completed the first investment on the same day. On September 28th, the Export-Import Bank announced that the task of injecting 50 billion yuan into the Bank Infrastructure Fund has been completed, supporting a total of 106major projects.

According to the Agricultural Development Bank, as of September 17, the second phase of the IFAD Infrastructure Fund has launched 732 projects with a total amount of 100 billion yuan; as of 20 September, the second phase of the CDB Infrastructure Investment Fund has allocated 150 billion yuan to support 421 projects.

This also means that the executive meeting of the State Council announced on August 24 that the new quota for policy-oriented development financial instruments has reached 300 billion yuan.

A relevant source told reporters that in order to ensure the smooth landing of the infrastructure fund, the three banks deployed staff to work in the relevant ministries and commissions to dock the relevant work of the fund project.

A reporter from the Securities Times noted that local governments are also actively docking and implementing infrastructure funds. Taking the Agricultural Development Bank as an example, after the end of the first batch of launch (August 20), the relevant leaders of Henan, Inner Mongolia, Jiangxi, Guizhou and Zhejiang successively met with the party committee secretary and chairman of the Agricultural Development Bank on the spot / by video. the contents of the negotiations involved the use of policy-oriented financial instruments to support local economic and social development.

The first batch of 300 billion

The gradual landing takes effect.

The National standing Committee made it clear that the policy-oriented development financial instruments worth more than 600 billion yuan are mainly used to supplement the capital of major projects, including new infrastructure, or to build bridges for special debt projects. The first batch of 300 billion policy-oriented development financial instruments was completed on August 26, coupled with the accelerated release of the second batch of 300 billion, further dredging the capital blockage points and speeding up the construction of major projects.

Take Sichuan as an example. On September 26th, Sichuan held on-site promotion activities for major projects in the third quarter of 2022, with a total of 219 major projects, with a total planned investment of 595.63 billion yuan. According to reports, there are 196 projects of policy-oriented development financial instruments, with a total planned investment of 416.84 billion yuan and a fund of 38.23 billion yuan. The ratio of funds to total investment is close to 1 ∶ 10. The first batch of 126 projects will be completed by the end of September, bringing the total investment of the project to 330.5 billion yuan.

The relevant responsible person of the Sichuan Provincial Development and Reform Commission pointed out that in the context of the fourth quarter of the decisive battle, the successive construction of policy-oriented development financial instruments projects has added strength and weight to the "decisive battle." In addition to the first batch of projects at the end of September, "some work will start this year."

All over the construction window period, the demand of the downstream building materials industry further warms up.

According to the centennial construction network data, from September 20 to September 26, the output of cement enterprises reached 8.9825 million tons, up 4.64% from the previous month, and reached the highest point of the year. The direct supply of cement in the current period was 2.65 million tons, an increase of 3.92% over the previous month. According to the analysis of Cinda Securities Research and report, the data of direct cement supply, which represents the demand for large infrastructure construction, continued to grow, accounting for nearly 30% last week, and the direct supply increased by more than 4.5% month-on-month. The progress of infrastructure projects returned to normal, and the demand showed replenishment.

In addition, the data show that since September, the operating rate of petroleum asphalt units has risen for four consecutive weeks, 8.1 percentage points higher than that at the end of August. Huachuang Securities Research News has pointed out that September to October is the peak season of traditional construction, and among the three more than expected factors restricting construction in August, such as high temperature, power restriction and epidemic situation, the first two disturbances have obviously subsided. From a microscopic point of view, the breakthrough of asphalt operation rate is far beyond seasonality. Only in the first two weeks of September, it has reached the level from 2018 to 2019. Zhang Yu, chief macro analyst at Huachuang Securities, believes that the super-seasonal rise in the asphalt operating rate actually confirms the lag of the formation of more physical workload relative to the allocation of project progress money. this also means that after the special debt and policy development financial instruments are accelerated to the ground in the early stage, more physical workload will still be formed by the end of the year.

The limit of special debt balance is opened.

Relay support year-end infrastructure

According to the China Bond Information Network, on September 27, the tender for the issuance of Liaoning provincial government special bonds (16 to 20 issues) was completed, marking that local governments made use of the special debt balance limit to issue special bonds to "open the floodgates." Public information shows that the 6.7 billion yuan special bonds issued by Liaoning Province take advantage of the special debt balance limit and are mainly invested in infrastructure construction and shed reform. Prior to this, Liaoning Province took the lead in completing the task of issuing new bonds in the country on June 23.

Not only Liaoning Province, but also many places across the country have made it clear that they will seize policy-oriented development financial instruments and special debts to increase the scale at the recent policy briefing on measures to stabilize the economy. According to the reporter's incomplete statistics, the Ministry of Finance has approved that the limits of special debt available for issuance in Jiangxi, Gansu and Henan are 23.4 billion yuan, 8.7 billion yuan and 31.4 billion yuan respectively.

At the executive meeting of the State Council on 7 September, it was decided that according to law, local governments should complete the issuance of more than 500 billion yuan of special debt since 2019. Judging from the recent "opening of the floodgates" at the local level, the infrastructure funds whose "relay" will soon be completed will be mainly issued in October.

"it is expected that in the fourth quarter, the more than 500 billion yuan of incremental funds will soon enter the infrastructure sector and form a physical workload during the year to help maintain the growth rate of infrastructure investment at about 10% for the whole year." Tang Chuan, an expert from the Ministry of Finance and investment director of 360 Government and Enterprise Security Group, told the Securities Times.

Wu Chaoming, deputy director of the Caixin Research Institute, told reporters that the special debt balance limit of more than 500 billion yuan is expected to have a significant effect in the fourth quarter. Considering that the proportion of special bond balance limit funds invested in infrastructure projects will not be much different from that of new special bonds this year, it will be about 70%, which means that the special bond balance limit may bring about 350 billion yuan of successor funds for infrastructure projects.

He also pointed out that policy development financial instruments are mainly used to supplement the capital of major projects, and if the subsequent downturn in the land market restricts fiscal expenditure and the economic recovery is not as expected, it is possible to continue to increase the quota of policy development financial instruments to strengthen and stabilize growth.

In addition, considering that in 2021, the Ministry of Finance issued 1.46 trillion yuan of new special debt limit in 2022 to various localities in advance, in order to promote the early issuance of the quota to form a physical workload as soon as possible. Tang Chuan believes that combined with the current pace of special debt issuance and the urgency of various localities for infrastructure development, the new special debt quota for next year will be issued ahead of schedule or further ahead of this year, so as to better meet the needs of project construction.