J.P.摩根-中国地方政府融资工具报告-中国债券市场

1、Asia Pacific Credit Research 04 June 2018China Local Government  Financing VehiclesA rough (and tough) ride ahead given limited  transparency, but there are alternativesAsia Corporate ResearchVarun Ahuja, CFA AC(852) 2800 6038 Tiantian Teng AC(852) 2800-7024 J.P. Morgan Securities (Asia Pacific) LimitedSee page 33 for analyst certification and important disclosures. J.P. Morgan does and seeks to do business with companies covered in its research reports. As a result, investors should b

2、e aware that  the firm may have a conflict of interest that could affect the objectivity of this report. Investors should consider this report as only a single  factor in making their investment decision.The emergence of LGFVs and their growing representation in the USD bond  markets continues to catch investor interest. Major policy shifts have raised  questions as to whether all LGFV can be considered provincial debt, and this is  further underscored by recent onshore

3、defaults, including some SOEs, leading to  more muted supply and wider spreads for the LGFV sector. In this report, we  present an update on recent policy changes as well as our views on their impact  on the LGFV sector. In an environment where onshore default rates are rising and  transparency stays low, we remain cautious on the sector as a whole, preferring  to own stronger SOEs rather than LGFVs. That said, we do make exceptions for a  few LGFVs that play strong

4、 policy roles (willingness) and backed by stronger  provincial governments (capacity). We also believe that while one or a few LGFV defaults would be acceptable to the central government, widespread defaults are  unlikely given the larger implications for the financial sector. We initiate coverage  of Wuhan Metro and its 19s with OW, Neutral on BJSTAT and its 20s and 25s,  on Yanzhou Coal and its perps c20s, '22s with OW with the bonds trading wider  than even Indika

5、, which we think does not make complete sense. The central government would continue to make LGFVs more market- oriented, as part of the ongoing deleveraging drive. Since the budget law  revision in 2014, the government has released a number of documentations  around LGFV operations and their funding, which we discuss in this note. Pace of issuance has slowed down in recent times. The issuance of LGFVs  USD bonds had increased substantially over 2015-2017 due to onshore issuance &

6、nbsp;policy tightening as well as LGFVs funding diversification. However, this has  slowed drastically in recent months, due to the central governments tightening  policy to address debt overhang problems in the system. In addition, recent  onshore defaults have given further apprehension about exposure to the sector, where underlying information flow remains very limited. Staying cautious on sector and preference for LGFVs with clear policy role  only. While LGFVs have risen

7、 to be a too big to ignore sector in JACI, the lack  of information flow and opacity in underlying businesses remain key concerns, especially in the current environment. We would stick to LGFVs with clear  strategically important roles and ideally with decent standalone credit profiles. Having said that, there are certain LGFVs that are quite wide in the 1-2yr  duration bucket, which present investors with the conundrum of missing  out on better yields if not invested but hav

8、ing a high jump risk if any of these  LGFVs widen materially due to financial constraints, which are difficult to  monitor given inadequate underlying information flow. Hence, in this note, while we categorize LGFVs based on factors such as  policy role, social and economic importance, etc., given that most LGFVs are  trading as a group in different yield buckets, we would look to take selective  exposure in LGFVs through credits in the preferred and some comfort categor

9、ies, while for exposure to higher yields, we are more comfortable with  the risk-reward and information flow in other China SOEs and HY corporates as  presented in this report. Completed     04 Jun 2018 05:55 PM HKT Disseminated 04 Jun 2018 06:08 PM HKT每日免费获取报告1、每日微信群内分享5+最新重磅报告；2、每日分享当日华尔街日报、金融时报；3、每周分享经济学人4、每月汇总500+份当月重磅报告（增值服务）扫一扫二维码 关注公号 回复：研究报告 加入“起点财经”微信群。2Asia Pacific Credit Research 04 June 2018Varun Ahuja, CFA (852) 2800 6038 Tiantian Teng (852) 2800-7024 Table of C

10、ontentsOnshore defaults back in focus3LGFV policy changes in recent years.5Document No.50  and 15% by China Economic Cooperation Center, however, its  shareholding structure has since changed based on the companys latest presentation.  Interestingly, just a few months ago, the company was in news (source: SCMP) to buy a marquee commercial building in Central, Hong Kong, from CK Assets for US$5  billion. CERCG is involved in the oil  Source: Bloomberg, J.P. Morgan. As a sector recommendation, we have been advocating an UW on LGFVs for  long

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