化债利好压降利差，政策收紧加快转型

Industry Investment Rating - The report does not explicitly mention an overall industry investment rating [1] Core Views - The "package debt resolution plan" including special refinancing bonds and financial institution participation in debt resolution has been steadily advancing in Q1 2024 [1] - New debt resolution methods such as "unified borrowing and repayment" and "central bank SPV" have been gradually implemented [1] - Urban investment bond issuance and net financing have improved quarter-over-quarter, with issuance terms lengthening and further concentration towards higher-rated issuers [1] - Urban investment bond issuance rates and spreads have continued to decline, with significant decreases in some key provinces [1] - Weak regional and low-quality urban investment enterprises have seen short-term liquidity pressure relief, but long-term debt resolution depends on local economies and enterprise development [1] - Urban investment enterprises face increasing transformation needs, with regional resource disparities potentially leading to differentiation during the transformation process [1] - Urban investment bond maturity and repayment pressures remain high in 2024, with some regions facing significant repayment challenges [1] Policy Environment - Special refinancing bonds continued to be issued in Q1 2024, with financial institutions participating in debt resolution [2] - New debt resolution methods such as "unified borrowing and repayment" and "central bank SPV" have been implemented in key provinces [2] - Regulatory authorities have further supplemented and refined debt resolution policies, with urban investment enterprise financing policies continuing to tighten [2] - In February 2024, Guizhou and Tianjin issued special refinancing bonds of 324.58 billion yuan and 201.8 billion yuan respectively [2] - Guizhou Hongyingda Construction Engineering Management Co issued an 18 billion yuan, 5-year corporate bond to repay maturing bonds of urban investment enterprises in the region [2] - In March 2024, Yinchuan completed 2.614 billion yuan in bank loan swaps for existing bonds and non-standard debt [2] - Liuzhou implemented the first 4.6 billion yuan central bank emergency liquidity support (SPV) funds [2] - The "14th document" in March 2024 allowed 19 provinces outside the 12 key provinces to independently report regions with heavy debt burdens and difficult debt resolution [2] Q1 Urban Investment Bond Market Review - Urban investment bond issuance and net financing improved quarter-over-quarter, with issuance terms lengthening [3] - Lower administrative level and weak credit quality issuers continued to see reduced financing scale and net repayments [3] - Urban investment bond issuance further concentrated towards higher-rated issuers [3] - Since the implementation of Document 35, except for Chongqing, other key provinces have continued to show net repayments or tight balances [3] - Issuance rates and spreads for urban investment bonds continued to decline, with significant decreases in some key provinces [3] - Yunnan's issuance rates and spreads remained high, with refinancing environment still needing improvement [3] - Some non-key provinces had spreads higher than the national average, with refinancing environment needing attention [3] - Q1 2024 urban investment bond issuance reached 1.56 trillion yuan, up 1.52% year-over-year and 31.86% quarter-over-quarter [3] - Net financing in Q1 was 72.83 billion yuan, down 85.64% year-over-year but improved from net repayments in Q4 2023 [3] - Early repayments of urban investment bonds in Q1 were about 80 billion yuan, with Anhui, Zhejiang, Hunan, and Guizhou each having early repayments of about 10 billion yuan [3] - Bonds with maturities under 1 year accounted for 24.87% of issuance, down 12.53 percentage points year-over-year [4] - Bonds with maturities over 3 years accounted for 40.04% of issuance, up 13.89 percentage points year-over-year [4] - 49 urban investment bonds with maturities of 10 years or more were issued in Q1, accounting for 3.26% of issuance [4] - Tianjin's medium and long-term urban investment bond issuance proportion rose significantly to 70.14% [4] - Yunnan's short-term urban investment bond issuance proportion remained close to 50% [4] - Interbank product issuance grew year-over-year and quarter-over-quarter, with medium-term notes up over 65% year-over-year and quarter-over-quarter [5] - Exchange products (including corporate bonds) declined slightly year-over-year but grew about 12% quarter-over-quarter [5] - Corporate bond issuance shrank significantly to about 30% of the same period last year [5] - AAA and AA+ rated issuers saw quarter-over-quarter growth in issuance scale and net financing [6] - AAA rated issuance maintained year-over-year growth, while AA+ rated issuance was flat year-over-year [6] - AAA and AA+ rated issuers accounted for nearly 80% of issuance, up about 6 percentage points year-over-year [6] - AA rated issuance declined 20.82% year-over-year, accounting for 19.97% of issuance, down from 21.14% in Q4 2023 [6] - Provincial and prefecture-level issuers saw year-over-year and quarter-over-quarter growth in issuance scale [6] - County-level issuers saw an 11% year-over-year decline in issuance scale and continued net repayments [6] - Jiangsu, Zhejiang, and Shandong ranked top three in issuance scale, accounting for over 50% of total issuance [7] - 12 key provinces issued 180.354 billion yuan in urban investment bonds, down 1.50% year-over-year and accounting for less than 12% of total issuance [7] - Except for Chongqing with 17.402 billion yuan in net financing, other key provinces continued net repayments or tight balances [7] - AA+ rated medium and long-term urban investment bond issuance rates and spreads declined year-over-year and quarter-over-quarter [9] - Guizhou, Tianjin, Guangxi, and Chongqing saw significant decreases in issuance rates and spreads [9] - Guizhou's issuance rates and spreads fell below the national average [9] - Yunnan's issuance rates and spreads remained high, with refinancing environment still needing improvement [9] - Shandong, Henan, and Shanxi had spreads higher than the national average [9] Outlook - Weak regional and low-quality urban investment enterprises have seen short-term liquidity pressure relief, but long-term debt resolution depends on local economies and enterprise development [11] - Urban investment enterprises face increasing interest payment pressure as new financing channels tighten [11] - Special refinancing bonds have helped resolve regional implicit debt, with local governments and financial institutions negotiating debt extensions and medium-to-long-term loans [11] - Urban investment bond issuance rates and spreads have continued to decline under favorable policies [11] - Regulators have implemented list-based management of urban investment enterprises, strictly controlling new financing for listed enterprises [11] - Some key provinces have clarified that refinancing can only be used for debt principal rollovers [11] - Urban investment enterprises' interest-bearing debt scale is large and continues to grow, with interest payments not supported by this round of financial debt resolution [11] - In 2022, nearly half of urban investment enterprises had net outflows from operating activities [11] - Profit coverage of interest expenses averaged less than 0.35x [11] - Most urban investment enterprises have had negative net increases in cash equivalents since 2021 [11] - Cash assets' coverage of interest expenses has declined yearly, reaching 2.5x at the end of 2022 [11] - Urban investment enterprises' transformation needs are increasing, with regional resource disparities potentially leading to differentiation during the transformation process [12] - The State Council and National Development and Reform Commission have emphasized promoting urban investment enterprises' transformation and high-quality development [12] - The 2024 government work report proposed improving the full-caliber local debt monitoring system and supporting high-quality urban investment enterprises' transformation [12] - List-based management and strict restrictions on new bond issuance for listed enterprises are forcing urban investment enterprises to accelerate transformation [12] - The number of bond-issuing urban investment enterprises and urban investment bond stock may gradually decrease [12] - Some lower administrative level and weak credit quality urban investment enterprises may exit the bond market faster [12] - Urban investment enterprises in regions with better resource endowments are expected to achieve transformation first [12] - Weak regional and low-quality urban investment enterprises may face dual pressures of transformation development and debt risk prevention [12] - The relationship between urban investment enterprises and local governments needs dynamic assessment during transformation [12] - Urban investment bond maturity and repayment pressures remain high in 2024, with some regions facing significant repayment challenges [13] - As of Q1 2024, outstanding urban investment bonds totaled 14.56 trillion yuan [13] - Assuming all callable bonds are exercised at the next call date, Q2-Q4 2024 urban investment bond maturities each exceed 1.3 trillion yuan [13] - Q1 net financing is far from covering Q2 maturities [13] - Jiangsu, Zhejiang, Shandong, Tianjin, and Sichuan have the largest Q2 maturities, accounting for over half of total Q2 maturities [13] - Shandong's refinancing environment recovery needs attention due to non-standard or commercial bill overdue negative sentiment [13] - Tianjin's issuance term structure, rates, and spreads have improved but still show net repayments, with significant Q2 maturity pressure [13] - Henan's Q2 maturities account for nearly 22% of its outstanding urban investment bonds, with concentrated repayment and liquidity pressure needing attention [13]