Research On Credit Rating System Of Local Government Bonds In China

Bond credit rating is an assessment of the overall degree of credit risk faced by a certain issuer or the reliability of the repayment of principal and interest on schedule of a certain bond,and marks the economic activities of high and low levels according to certain standards.With the issuance of local government bonds,the credit rating of local government bonds in China arises at the right moment,which provides effective information services for all relevant parties to evaluate the solvency and credit risk of local government debt,and has become one of the indispensable factors to promote the development of local government bonds.At present,domestic scholars' research on Chinese local government bonds mostly focuses on the bond operation mechanism or issue pricing,and seldom discusses it from the credit rating dimension base on international experience.This paper argues that,First,credit rating is an essential requirement for public information disclosure before the issuance of local government bonds.It is a comprehensive assessment of local government's ability to repay principal and interest,overall credibility and debt credit risk,which runs through all aspects of bond registration,issuance and existence,and plays an institutional guarantee role in information disclosure,issuance pricing,market transactions and risk management of bonds.Secondly,At present,there are some problems in local government debt management,such as non-standard management,excessive borrowing and hidden debt risk accumulation.Especially,the development of local financial information disclosure system lags behind,the integrity and coherence of information disclosure is insufficient,and the market constraint mechanism can not be effectively used.However,credit rating can reveal the financial revenue and expenditure and debt management of local governments in detail and comprehensively,and it is directly related to the cost of bond financing.It plays an important role in regulating local debt raising,strengthening the mechanism of financial information disclosure and improving the level of bond marketization.Third,the development of local government bond credit rating in foreign capital market is relatively mature.China can take advantage of its advantages and avoid its weaknesses,and fully learn from the beneficial international experience to provide support for improving its own local government bond credit rating system.Fourthly,in the future,with the continuous differentiation of economic development level and government governance capacity in different regions of China,the credit spreads of local government bonds will further widen,thus amplifying the credit risks faced by market investors.The credit rating report is a professional comprehensive evaluation of local government's solvency and willingness at present and in a certain period in the future,which can save market investors the cost of obtaining information,reduce information asymmetry and provide a reliable basis for analyzing and judging bond credit risk.Fifty,strengthening the construction of China's credit rating system is related to the development of local rating agencies and the improvement of market credit environment,which is conducive to enhancing China's authority and voice in the rating field,resisting international credit rating hegemonism,and safeguarding the credit security and economic interests of the Chinese government and enterprises under the background of increasing uncertainty in the future development trend of Sino-US relations.This paper points out that local government bonds have become the fastestgrowing bond variety in China's bond market in recent years,which is not only an innovative fiscal policy tool,but also a necessary means to standardize local debt management and prevent and resolve debt risks.There are some problems in the development of local bonds,including the failure of credit rating system,the failure of market-oriented price formation mechanism,the imperfection of relevant supporting systems and administrative intervention in the process of bond issuance.This paper puts forward the corresponding countermeasures from four aspects: perfecting the credit rating system,perfecting the local financial information disclosure and supervision system,strengthening the construction of relevant policies and regulations,and establishing the local debt risk early warning and guarantee mechanism.When China's local government bond credit rating first appeared on the historical stage,foreign development has become increasingly mature.For example,the three major rating companies in the United States have carried out municipal bond rating business for 100 years,the rating system is complete,rating framework and methods have become international standards,and the rating quality is verified in sufficient historical data;Japan's local rating agencies are strongly supported by regulatory policies and compete with international rating companies in the field of local bond rating,and occupy half of the market;the high level of internationalization and marketization of Australian state government bond credit rating provides a guarantee for attracting foreign capital to invest in domestic bonds;India,as a representative of emerging market countries,has also made some beneficial attempts in the field of municipal bond rating.Through international comparative analysis,this paper fully discusses the respective characteristics and development experiences of local government bonds in the United States,Japan,Australia and India in the aspects of issuing mechanism design,rating method application,policy guarantee and market supervision environment construction.This paper expounds the advantages and disadvantages of foreign credit rating systems,and combining with the actual situation in China,puts forward four points for reference: one is to understand the important role of local bonds and credit rating;The second is to optimize the ecological environment of domestic credit rating;The third is to cultivate local rating agencies and resist the monopolistic behavior of international rating agencies;Fourth,promote the internationalization of credit rating.The above is based on international experience,which is an innovation of this paper.In the practice of local government bond credit rating methods,this paper expounds the model process and application of international rating agencies on municipal bond credit rating,and on this basis,combined with the actual situation in China,it makes more targeted arrangements in the selection of rating indicators and structural design,and constructs a multi-level local bond credit rating index system.At the same time,based on the issuance data of China's local government bonds from 2015 to 2018,the entropy method is used to calculate the weight of each level of rating index,which has a certain innovative significance,It can be said that the credit rating of local government bonds in this paper is more independent,the differentiation and accuracy of rating results are higher,and the rating information is more open and transparent.In the end,this paper puts forward some suggestions on the further improvement of China's local government bond credit rating system,including breaking the market expectation of implicit guarantee of central finance,focus on solving the problem of implicit debt,improving the financial information disclosure system of local government,establishing a double credit rating system of "government and market",perfecting the credit rating supervision system,enhancing the independence of market rating agencies,expanding the opening of rating market to the outside world,and enhancing the right to speak of China's credit rating.Generally speaking,this paper summarizes the evolution process,development trend,basic principles,rating methods,necessity and existing problems of credit rating of local government bonds in China from the historical and practical point of view;Starting from the international experience,this paper makes a multi-directional comparative analysis on the issuance mechanism,market environment and institutional arrangement of local government bonds at home and abroad,focuses on the advantages and disadvantages of the credit rating system of relevant countries,and draws useful experience from it,and puts forward some suggestions for China.From two dimensions of theoretical research and empirical research,combined with qualitative analysis and quantitative analysis,we designed and applied the rating method and index system closer to China's bond market,which made the credit rating more effective and transparent.It can be said that it is of positive significance to further improve the credit rating system of local government bonds,to realize the standardized management of local financing,to improve the market-oriented issuance level of local bonds and to enhance the information acquisition ability of all parties involved in the market.