The Analysis On Pricing And Spread Of Commercial Paper In China

Nowadays, China is confronted with severe challenges in the financial reformation. Meanwhile, more and more financial products have been provided on the financial market. Commercial Paper has been launched in May 2005 in inter-bank market as the replacing product of middle or short-term loan. It is becoming an attractive instrument for issuers and investors. However, how to Price commercial Paper in the no efficiency financial market is becoming the most important focus for issuer, under writer and investor.In this paper, we firstly introduce the definition of Commercial Paper, and state the process of release and trading. Furthermore, we display the advantages of Commercial Paper by comparing with other financing instruments, therefore the applicable enterprises to issue Commercial Paper are available. In the followings, we find out the distance between domestic Commercial Paper and foreign Commercial Paper, and then discuss the direction of development about Commercial Paper in China.The pricing of Commercial Paper is researched carefully in 3rd chapter on the basis of lots of data analysis. The first step, we find out spread factors between Commercial Paper and Central Bank Bill on the issue market. In the second part, we track the independent variable about spread between Commercial Paper and Central Bank Bill on the trading market, and list the formulas of model in this chapter.There are many kinds of risks which must be faced by participators on the Commercial Paper market, such as credit risk, market risk, liquidity risk rating risk and other risks. In the last chapter, we discuss tapes of risks and give specific solutions to each type of risk.