Research On Credit Risk And Prevention Strategy Of City Investment Credit

Since economic reform,China has been a large number of investment in urban construction,but still can’t match up with rapid economic development and the huge demand of expanding city scale.In addition to the existing problems of the infrastructure project investment and the management system,China’s urban construction had lagged behind,which the most direct reason is the lack of money for the urban construction. According to the survey of the United Nations,urban infrastructure investment in the developing countries should be 3% to 5% of GDP. China accounted for only 2.9%, which has yet to reach the lowest level. Due to the limitations of the central government and local fiscal revenue, it has increased considerable difficulties of investment in infrastructure construction.And relevant published provisions for the state commercial banks had set limit to provide loans for infrastructure projects. Commercial loans is not used for capital investment.Policy Banks funding is limited, the loan objects of which are focused on national infrastructure projects, especially after the reform of policy Banks will further cut funding for local infrastructure projects. In the capital market financing tools, the quasi-municipal bonds have become one of the important financing channels for infrastructure projects.Under the plan of the "four trillion" investment, China city investment bond issuance is greatly increased. At the same time, the company’s overall debt of he city also rose sharply, the total debt of which is over the local government fiscal income level.The credit level of urban construction investment company is not optimistic. Therefore, credit risk of the urban construction investment bonds should cause enough attentions.And this paper successively introduces developing courses, current situations of quasi-municipal bonds, and then throws the causes of credit risk on quasi-municipal bonds, and then application for the KMV model to measure reasonable debt issuance.In the last part of the paper puts forward prevention strategies for credit risk of the urban construction investment bonds.