Research On Government Intervention In The Development Of China's High-yield Bond Market

High-yield bond is a kind of financial instrument which is developed with the development of economy and finance.It is an important part of bond capital market.High-yield bond originated in the early 20th century and began to develop rapidly after the 1970s,and the size of the global market has so far exceeded $ 1 trillion.The United States is the birthplace of high-yield bond,and also has the world's largest and most mature high-yield bond market;European high-yield bond market followed,being the world's second;The high-yield bond market of South Korea and other emerging Asian countries started late,although small,in recent years,growing rapidly with the Asian economic development.High-yield bonds are low-credit bonds issued by enterprises,which are characterized by high risks and high returns.They essentially finance high-risk need and supply,and are compensated by high returns.Therefore high-yield bond market is an important part of a mature financial market.According to international development experiences,the broad sense of high-yield bond is usually divided into three categories:the "rising stars" high-yield bond with the small and medium enterprises being the issuers;the "fallen angels" high-yield bond from degradation of the high-credit rating bond;the "leveraged buyout" high-yield bond issued for the purpose of mergers and acquisitions.These three types of bonds are all classified as the high-yield bond because of their high yields and credit risks.This article mainly studies the first type of high-yield bond,namely,the "rising stars" high-yield bond with the small and medium enterprises being the issuers.High-yield bond market is the carrier of market-oriented financial allocation of resources,and through the development of high-yield bond market finance can support the financing of small and medium-sized enterprises,promote the adjustment of industrial structure and regulate the order of private capital market,thus promoting the optimal allocation of resources throughout the society.Therefore,it is of great practical significance to develop high-yield bond market in China.The development of high-yield bond market is inseparable from the government's role.High-yield bond market has publicity,information asymmetry,externalities,lateness and other market failures,so the government need to make up for the fields of market failure through the improvement of the market system,supervising the market risk,guiding the market development and other ways.In the meantime the reasonable boundary must be set for the intervention of the government:the market must take place where it can function effectively and the government must reduce intervention so that the market rules such as the law of competition,the law of price and the law of supply and demand can give full play to the role of resource allocation.China's bond market has developed rapidly,and the current market size has reached the world's third,but basically with state-owned enterprises and large enterprises as the representative of the high-grade bonds,whereas small and medium-sized enterprises high-yield bond market has not really shaped.In 2007,China began to try to promote the financing of small and medium-sized enterprise bonds,and has introduced small and medium-sized enterprise portfolio bonds,small and medium-sized enterprise collection notes and other innovative varieties,but there is still a big gap with the real sense of high-yield bonds.The launch of small and medium-sized private bond in 2012 marked the birth of the Chinese version of high-yield bond.And since 2015,China's high-yield bond market has been in a state of stagnation.The underdevelopment of China's high-yield bond market is closely related to government intervention,that is,in the development process emerges the problem of government failure.This mainly includes two aspects:First,the government's over-intervention,which weakens the efficiency of the market,mainly taking the form of the financial fallback distorting market competition,the restrictions on investment pricing to interfere with the market price and the control of the issuance affecting the balance of supply and demand;The second is the lack of government intervention in China's high-yield bond market,which is that the government fails to effectively intervene to make up for market failure,mainly with the form of the lack of sound infrastructure,lack of market regulation and market development lag.From the perspective of international development experiences,when the development stage of high-yield bond market is different,the government intervention focus is also different:the United States high-yield bond market is the most developed and formed spontaneously by the market mechanism,with the government mainly acting in institution innovation,market risk regulation and so on;the European high-yield bond market is based on the more mature capital market,so the government mainly plays the role of deregulation;and South Korea as the representative of the Asian high-yield bond market started late,with a weak basis of bond capital market,has the government's direct guidance and nurture in its development process which played an important role.The experiences of government intervention in high-yield bond markets in different countries or regions provide some enlightenment for the development of high-yield bond market in our country.The development of high-yield bond market in our country should draw lessons from foreign experiences according to its own situation.For the previous analysis of government intervention issues,this paper puts forward some concrete policy suggestions from two perspectives:the government to reduce the interference of the market rules,and the government to strengthen the makeup for the market failures,to promote the steady and sustainable development of China's high-yield bond market.The suggestions for the government to reduce the interference of the market rules,include changing the financial intervention behavior,the relaxation of investment pricing restrictions and the issuance of access restrictions;and for the government to strengthen the makeup for the market failures entails the improvement of market infrastructure,the soundness of the market regulatory mechanism and the encouragement and promotion of market development.