The Research On The Improvement Of Municipal Bond Credit Rating Methods In China

This paper reviews the history and current status of China's municipal bond development.Through the study of current situation,this paper will establish the historical context and reasons for the development of municipal bond issuances,to study the impacts and major issues of fiscal decentralization.Combined with the development trend of fiscal policy in China,this paper will study the improvement of credit rating indicators and rating methodologies for the municipal bonds and to provide foundations for further research.Including examined in details the reasons for the development of municipal bonds,the history and current status,as well as main issues encountered in the development of municipal bonds and the underlying causes.This paper primarily focuses on the fundamental methodologies and analysis used in the credit rating system by western countries,especially the US.It aims to provide case studies and learning points for the establishment and improvements to a credit rating system that is suitable for China,drawing on successful overseas experiences and systems.By analyzing the credit rating system of the US municipal bonds,this paper will mainly discuss the bond issuing process and credit rating system for US municipal bonds,issues encountered and solutions found when issuing US local bonds,and the fundamental methodologies and analysis used in credit rating system of US local bonds,as well as how China could learn and benefit from the above.With the existing issues in China's municipal bonds,and combined with the new trend of current fiscal policy reform development in Chin,this paper proposes a credit rating model that could be adopted in credit rating regime and system when issuing municipal bonds.The model includes the variation of real estate price as a variable and studies the impact on local government debt risk by this variable.At the same time,the paper proposes to hypothesize the impact on the local government debt default risk arising from local land transactions and dependence on land fiscal revenue.This paper will examine the newly established and improved credit rating model and index system using Guangdong province as an example,introducing several models to further modify and innovate,and to verify using independent variables and credit rating methodologies as two variants.This paper aims to verify the accuracy and impartiality of the standardized credit rating system through credit rating analysis of various municipal bonds issued by Guangdong municipal governments.Through the introduction of several relevant models,selection of variants,as well as implications of layering indicators and ratios,this paper will also analyze and quantify the credit ratings for bonds issued by various municipal governments based on the above model.To study the current credit ratings and the commonly used models for China's municipal bonds,including the characteristics of the credit rating system for municipal bonds,credit rating methodologies and guidelines commonly used in international credit rating systems,credit rating methodologies and guidelines used in China's municipal bonds as well as the main focus in credit rating system,this paper will discuss the existing technical and systematic obstacles faced in the current municipal bond credit rating system,proposes suggestions to further improve relevant policies and implementations for the credit rating system of municipal bonds.In addition,it also includes a proposal to current policy in order to improve China's municipal bond credit rating system with step by step plans.