Discussion On Issues Related To China's Local Governments To Issue Bonds

The local bond is one concept which is approximately the same as the national bond in significance and correspondingly. It is the important component in a national government bond system. Local bond's release in overseas has the universality. No matter in the sole system country with highly degree of financial centralization, such as Japan and France, or in the federal system country with implementing the financial decentralization, such as the US, Canada and some developing countries, like Latin America and so on, the local loan occupies the important position in its financial revenue and the bond system.Our "Budget law" stipulated:"Unless the law and the State Council admit, the local authority do not float a loan of the local authority debt."After tax reform in 1994, the proportion that the local finance income occupying the nation financial revenue drops unceasingly. But in the period of the economic restructuring, the industry restructure and the construction of harmonious society, local authority's governance increases greatly, having massive new call for fund. In lacks in financing channel's situation, the local finance is intense day by day. Many local authorities use each way to atonement financial funds gap, gathering capital to float a loan the massive debts through each kind of urban construction companies'names or by prestige mortgage bank loan.The practice that western nation distributes the local bond proves that distributing local bond is much better. Through distributing local loan, the local authority may strengthen the self-war chest ability and make up for public welfare and development finance insufficiency. So long as sending the debt system to consummate, the supervision to be efficient, distributing the local loan will be advantageous to place financing, strengthen government debt total management and advantageous to guard finance risk. At present, our country has entered the crucial phase of comprehensively building socialism market economy system. Therefore it is urgent to establish the local loan system and standard local loan management. This article studies the feasibility that the local authority issue debentures and the concrete release operator schema, including the release of main body, the debt scale, the debt risk assessment, the debt use, the bond classification, the debt age limit, the interest rate, the guarantee question and the debt behavior afterward quality rating. Because issuing debentures lacks the practice, this article proposes the concrete operations step that our local authority issue debentures, through the local bond market in developed country like American and Japan.This article divides into five parts. The first part provides the theory summary for local authority issuing debenture, mainly includes the bond theory, the financial decentralization theory and the public product theory; The second part is the necessity and the feasibility for our country local authority distributing the local bond, as well as the viewpoint that some domestic scholars opposed to distributing the local bond; The third part introduces the experience and procedure that developed country such as the US and Japan follow, obtaining the beneficial enlightenment to our distributing the local bond; The fourth part discusses the release way, including the release main body, the release scale, the release age limit, the release main body's risk assessment, the release behavior appraises and so on; The fifth part discusses the possibly negative contents and the solution of countermeasure.This article unifies the present local authority financial circumstance and the credit capacity through my reading of related literature and the material, determines reasonably the release main body and the release scale through the method that developed country debentures concerned requirements. This article designs a set to suit our country actual situation about the supervision and the appraisal means. By using the comparison methodology, the real diagnosis analytic method and the theory methodology, it proposes the policy viewpoint.In the credit risks appraisal aspect of the local authority, the domestic scholar proposed to calculating the violation probability with the KMV model. What the KMV model mainly applies is the financial data of the listed enterprise in capital market. By the stock price, undulatory property and other correlation data, it calculated the enterprise's property value and the undulatory property, then the computation violation distance, obtaining borrower's anticipated violation probability. Because of the difference between government department and enterprise, the government department analogy has not provided in enterprise's detailed financial data for this model and such model's reckoning result will have some deviations. This article also uses the KMV model to carry on the appraisal, through the KMV model's suitable revision, making a series of the macro economic factor like GDP rate of increment and total savings ratio. It analyzes the different area credit status contact with the probability of debtor's violation, the transfer matrix and the diversified economy factors.