Hong Kong, October 23, 2017 -- Moody's Investors Service says that public-private partnerships
(PPPs) in China (A1 stable) continues to grow in number and investment
value, with more projects advancing to the implementation stage
this year.
"Support from the central government has resulted in positive regulatory
developments in China's Public Private Partnership (PPP) framework,
thereby enhancing the financing options available to PPP developers and
investors", says Osbert Tang, a Moody's Vice President
and Senior Analyst.
"And, regulations that increase transparency and improve investor
protections are positive for the ongoing development of the PPP sector,"
adds Tang.
Moody's explains that the improved regulatory transparency of longer-term
financing provides greater clarity to private sector investors.
Moreover, the increased availability of longer term financing will
likely increase the attractiveness of China's PPP projects to the private
sector, because it will allow investors to better match the long-term
cash flow from such projects.
Moody's conclusions are contained in its just-released report
titled "Cross-Sector: Public-private partnerships
are making steady progress in China".
PPP projects in the national database grew RMB2.9 trillion or 21.5%
for the six months to 30 June 2017, and these projects continued
to advance through their development life cycle, with projects at
the implementation stage accounting for 20% of all projects as
of end-June 2017 compared to 17% at end-2016.
Moody's explains that the implementation stage represents the second
last step in the Ministry of Finance China Public Private Partnerships
Center's five-stage PPP life cycle, which comprises:
1) the identification stage, 2) the preparation stage, 3)
the procurement stage, 4) the implementation stage, and 5)
the project transfer stage.
And, there has been no material change in the mix among the three
broad PPP procurement models (demand risk, availability payment
and hybrid) during the six months between January and June 2017.
Moody's report points out that the total number of PPP projects
in the national database increased to 13,554 at end-June
2017 from 11,260 at end-2016, a rise of 20.4%.
And, their total investment value rose to RMB16.4 trillion
at end-June 2017 from RMB13.5 trillion at end-2016,
representing a growth of 21.5%.
Subscribers can access the report at
http://www.moodys.com/viewresearchdoc.aspx?docid=PBC_1088479
The report may also be found through Moody's topic page "China's Trilemma:
Growth, Reform and Stability", available at http://www.moodys.com/chinarebalancing.
This page provides a centralized source for Moody's research related to
key credit issues in China as the country's macroeconomic story continues
to unfold.
Recent Moody's publications relating to China's Trilemma include:
• Banks — China: Improved asset quality and funding profile
in the first half, but weakened profitability
• China's Belt and Road Initiative: BRI report card:
Positive factors outweigh negatives for China and recipient countries
• Property — China : Most rated developers have capacity
to manage higher bond refinancing risk in 2018
• Government of China -- A1 Stable: Regular update
• Securitization — China: Sector update — Q2 2017:
Issuance volumes up; auto ABS performing well
• China's Plan to Tighten Regulation of Negotiable Certificates of
Deposit Is Credit Positive for Banks
• Mass Transit Sector — China : Strategic importance
underpins credit profiles; Heavy capex remains
• NPL Securitization — China: Chinese NPL deals show
solid performance, but short history clouds future
• Internet companies — China: Finance operations weaken
credit quality; most companies have mitigants
• Cross-Sector — China: Reduced Credit Intensity
of Growth Key to Achieving Policy Objectives
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This publication does not announce a credit rating action. For
any credit ratings referenced in this publication, please see the
ratings tab on the issuer/entity page on www.moodys.com
for the most updated credit rating action information and rating history.
Ada Li
Vice President - Senior Analyst
Project & Infrastructure Finance
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077
Terry Fanous
MD-Public Proj & Infstr Fin
Project & Infrastructure Finance
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077
Releasing Office:
Moody's Investors Service Hong Kong Ltd.
24/F One Pacific Place
88 Queensway
Hong Kong
China (Hong Kong S.A.R.)
JOURNALISTS: 852 3758 1350
Client Service: 852 3551 3077