The New Deal leads the flow of financial water into the infrastructure sector
2020-05-10 17:51:26
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Infrastructure investment has played a prominent role, and the demand for capital is also increasing. Under the guidance of a number of policies, more social capital will accelerate into key infrastructure projects. The China Securities Regulatory Commission and the National Development and Reform Commission have jointly issued a notice that the pilot of publicly-funded REITs in the domestic infrastructure sector has officially started. This will provide a new investment tool for capital market investors while revitalizing the existing infrastructure assets. At the same time, the speed of PPP (government-social capital cooperation) has increased significantly. Shandong, Guangxi and other places have issued specific guidance documents to guide the high-quality development of PPP and encourage social capital to participate in infrastructure construction. In addition, many market institutions have also actively carried out various forms of investment and financing businesses such as equity-debt integration and investment-loan linkage, to provide more medium- and long-term funds for infrastructure investment, especially new infrastructure investment.
Infrastructure construction is an important way to stabilize investment. Recently, many plans have been put forward to promote investment in major infrastructure projects. According to public information, Sichuan Province strives to complete 140 billion yuan of urban infrastructure investment this year around urban infrastructure construction; Zhejiang Province proposed to complete a comprehensive transportation construction investment of more than 1 trillion yuan through three years of efforts. In the field of new-type infrastructure, Chongqing is planning to establish a dynamic database of major new infrastructure projects. At present, there are more than 250 projects with a total investment of more than 230 billion yuan; more than 40 new infrastructure projects are under construction or planned to be started in the industry and information sector in Guangdong Province. Investment is expected to exceed 50 billion yuan in 2020. With the increase in construction and planned construction projects, the demand for capital for infrastructure investment is also increasing. Industry insiders said that the financing of infrastructure projects has always been an important part of restricting the growth of infrastructure investment. Relying on financial investment alone is not sustainable. It is necessary to innovate investment and financing mechanisms and increase the enthusiasm and efficiency of long-term participation of social capital in infrastructure projects.
The China Securities Regulatory Commission and the National Development and Reform Commission jointly issued the “Notice on Promoting the Relevant Work of Real Estate Investment Trust Funds (REITs) in the Infrastructure Sector” and issued supporting guidelines. The publicly-raised REITs that have been brewing for many years are "starting out", and are also considered by industry insiders to be an important measure to enhance the ability of the capital market to serve the real economy and promote the high-quality development of infrastructure.
Publicly-raised REITs refer to standardized financial products that convert real estate assets or equity (including infrastructure, rental housing, commercial properties, etc.) into highly liquid publicly traded transactions. Liu Qiao, Dean of Guanghua School of Management, Peking University, said that it is the right time to vigorously develop the Chinese REITs market. REITs are essentially the securitization of mature real estate industries in the capital market. Through the development of REITs, the stock of assets and real estate assets formed by infrastructure investment, as well as a large number of incremental parts in the future, can be incorporated into marketization as underlying assets. In the resource allocation system of China, price discovery is realized through reasonable valuation, pricing, issuance and secondary market transactions.
Industry insiders said that due to the large amount of stock assets deposited in the infrastructure field that could not be realized in time, the implementation of public infrastructure REITs can revitalize these stock assets and recover funds for the construction of new infrastructure supplementary board projects, forming a good investment cycle.
Liu Shijian, Director of the Industry Development Department of the PPP Research Center of Tsinghua University, said that supplementing cash flow through public placement of REITs can significantly reduce the financial leverage of local governments, realize equity investment and popularization of infrastructure products, and implement market-oriented reform of infrastructure investment.
It is worth noting that the REITs pilot specifically pointed out that priority should be given to supporting infrastructure supplementary board industries, including transportation facilities such as warehousing and logistics, toll roads, municipal engineering such as water, electricity and heat, urban sewage and garbage treatment, solid waste and hazardous waste treatment and other pollution. Governance projects. Encourage new types of infrastructure such as information networks, as well as national strategic emerging industrial clusters, high-tech industrial parks, and special industrial parks, to carry out pilot projects. "The new infrastructure is closely related to the country ’s future development strategy, and it needs to mobilize the power of social capital. The first is to pursue certain liquidity and freedom of advancement and retreat, and the second is to pursue appropriate returns. From this point of view, REITs are very in line with social capital ’s Yes. At the same time, the new infrastructure iteration speed is relatively faster, and it also requires financial instruments with higher liquidity to support. "An industry source who has been studying REITs for many years told reporters.
In addition to publicly-raised REITs, PPP, which has been implemented for many years, has also recently shown speed-up signals, playing a more important role in guiding social capital to actively participate in infrastructure construction. The Shandong Provincial Department of Finance issued the "Guiding Opinions on Carrying out the PPP" High Quality Development Year "Activity of Government-Social Capital Cooperation". Previously, Guangxi also issued the "Notice of Guangxi's Ten Measures for Further Accelerating PPP Work to Promote the Stable Development of the Economy." According to industry sources, there are still many provinces and cities in the process of preparing relevant documents to support the development of PPP. Jinyongxiang, chairman of Dayue Consulting, said from the Shandong Provincial Documents that PPP must not only develop, but also emphasize quality. "PPP, which has been proven to be a relatively standardized financing model, has been highly valued. It is expected that PPP will go out of the trough of the previous two years this year and play an important role in the work of" six guarantees. "He said.
Industry insiders said that in order to adapt to new demands and trends, the traditional infrastructure investment and financing model should and must be changed. "Development of financial products with future income rights model, financial products with new types of collateral, and financial products with a combination of equity and debt. In addition, it can also fully mobilize the power of private capital, promote the PPP financing model, and make efforts in direct financing. Make full use of equity investment funds in the capital market and reduce the cost of capital, "said Guo Yonggang, general manager of Oriental Jincheng Structured Finance Department. Everbright Trust stated that it had paid attention to investment opportunities for new infrastructures earlier, and explored new models for investing in new infrastructures through intrinsic business and trust business synergy, equity-debt integration, and investment-loan linkage. At present, the company is promoting the investment of equity investment funds in the fields of artificial intelligence and Internet of Things.
Industry insiders also said that the REITs pilot and other policies will drive more long-term funds into the field of infrastructure. Guo Yonggang said that in the short term, the scale of the pilot issuance of REITs is not large. In the long run, the REITs pilot project requires the project to operate for more than 3 years, and has generated continuous and stable cash flow, so it will be mainly stock assets. At present, the scale of China's stock infrastructure assets has reached the level of 100 billion yuan. With reference to the development history of REITs in the United States and other countries, the scale of projects that meet the conditions for issuing REITs is expected to be trillions of dollars. Everbright Securities' building materials team released a report saying that from 2009 to 2019, the cumulative investment in traditional infrastructure reached 128 trillion yuan. In the next 3 years, if 5% of infrastructure assets are securitized through REITs, the scale can reach 6.4 trillion yuan; if 3% of infrastructure assets are securitized through REITs, the scale can reach 3.8 trillion yuan.
