The Financing System In The Corporate Bond Financing In China

On the mature international bond market, it is an important means of corporate financing to issue the bond. Often, the amount of money through corporate bond financing is three to ten times of that of stocking financing. In the financial system of our country with the bank system playing the leading role, the debt market of corporate develops unusually slowly and corporate debt financing is small. At present, the financing structure in our country brings heavy pressure on bank system. To enlarge the proportion of direct financing is task of top priority of perfecting the system of financial structure and taking precautions against financial risks. To develop the corporate debt market is a kind of effective means to increase proportion of direct financing. The domestic study on company's bond mainly concentrates on bond market itself at present and study of its role and status rare. This article studies the significance of developing corporate bond market through the comparison of the financing of corporate bond market and bank loan, stock financing. At the same time, combining the capital structure theory, this article also studies the factors of choosing company's debt financing and demonstrates the necessity of developing bond market of the company from both macroscopic and microcosmic aspects.In 2004, The State Council's Several Suggestions on Advancing the Reform and Opening-up and Stable Development of Capital Market pointed out in details that, on the basis of controlling the risk strictly, encouraging eligible corporate to raise the fund through issuing company's bond, changing the situation that the bond financing development lags behind relatively, enriching the variety of bond market, and promoting the capital market to develop in harmony should be done. It also suggests that making and perfecting such rules and regulations as company's bond issuing, trade, information disclosure, credit rating, and setting up and amplifying such debt-payment security mechanism as assets mortgage, credit guarantee be done. It has pointed out the direction for bond market especially the further development of the corporate bond market. This article is to analyze problems and reasons that exist in the development of bond market in our country in order to make suggestions for further development.This article is divided into six parts altogether.The first part mainly introduces the relevant theories of the bond of corporate (the company). Company's capital structure theory includes agent's cost model, information asymmetry model, and annexation and purchase model. This theory holds that, within the company optimum capital structure, debt financing should occupy certain proportion, that debt rate raises with degree information asymmetry of the company and investor, that high -qualified company is even more inclined to issue debts to form high debt rate, and that at the same time high liabilities can make the company owner taking the initiative in the purchasing case instead and use debts to control the bankrupt risk in ordinary management.The comparison theory of two kinds of primary liability tools, company's bond and the bank loan, holds that the main foundation of the bank's existence is to solve the information asymmetry problem, to reduce morals risk, to reverse choice, mobile risk, etc.;And the advantage of company's debt lies in optimizing financial resource distribution through the signal of the market price in order to make the fund flow into enterprises needed most with the minimum cost. Micro corporate will balance and choose these two kinds of financing tools under the outside restraining condition. The developing countries, because of relatively high degree of information asymmetry in the stage of economic development, generally choose the financing system within which the bank system occupied a leading position.The second part emphatically compares financing way of capital market of our country and studies the importance of developing the corporate debt market. First of all, this part, through the comparison of the bank loan and corporate debt financing, indicates that, in our country like most Asian countries, all systems of financing rely mainly on bank, which occupies the absolute position in the financial system. The Asian countries, after financial crisis, deeply realize that bank system had lost its due supervision function, thus led to the lost of bank function. And developing corporate debt financing and substituting the bank loan partly is not merely the need of rational resource distribution, but also another way of preventing the crisis of the bank effectively and managing bank malfunction successfully.And then this part compares stock financing with corporate debt financing. Itpoints out that, because of the imperfection of company administration structure in our country, corporate of our country has a partiality for stock financing and the development of the stock market is far greater than the bond market. But such uneven development must bring negative effect on the economic both microcosmically and macroscopically. So it needs our attention to expand the proportion of debt financing, to avoid capital negative effects and adjustment behavior produced, and it has also transmitted the positive signal to investors.Taking bond of Sanxia for example, the third part analyses the important meaning of our country's developing the corporate bond. With the constant perfection of company's administration structure in our country and capital structure, the increasing strength of the policy, which supports dynamics of the corporate bond and market-based paces of interest rate, the debt market of enterprise of our country is welcoming the unprecedented development opportunity.The forth part analyses in depth the current developing situation of the corporate debt market in our country and existing problems. Through such data as the issue value, variety of issue and transaction cost of corporate debt, etc. of the past 20 years, it can be found out that the development of the corporate bond market in our country has already lagged behind the need of economic development at present, that the proportion of corporate debt is too low in the direct financing, that the scale is developed slowly. These phenomenons are the main manifestations of out-of-balance structure of bond market, and have already become the important factor of restricting bond market development. Main factors of restricting development of corporate bond market development in our country at present are as follows: supervision and control, the factor of the agents and the incompletion of the infrastructure.The fifth part uses international experience for reference mainly, and analyses the operation mechanism of the foreign bond market of mature enterprise. The corporate bond market of developed country represented by U.S.A. is in large scale, wide in variety and the system of issue and trade is sound. The article, from issue management, the grade system, guarantee mechanism, fixed issue price, investment subject, information disclosure and ways of trade these seven respects introduces foreign corporate operation mechanism of bond market in details and analyses the experiencethat our country can use for reference.The sixth part, according to the situation of our country, puts forward the policy of perfecting the debt corporate market in our country. First, the reform of issue management of the corporate bond requires that limits of the corporate bond issuer's qualification be loosened, that the examination and approval system be carried out to the system of approval progressively, that management of issue amount of the corporate bond be canceled and that all kinds of fair market participation opportunities of enterprise be offered. Second, reform the system of credit rating, and set up the mechanism that the creditor chooses the bond rating organization of the corporate;import actively the rating organization of foreign corporate to promote grade competence. Third, set up and perfect the information announcing system of the corporate bond. Strengthen disclosure information of the corporate bond publisher. Investors (creditors) understand the publisher's management state in an all-round way in time. Set up mechanism of information disclosure of corporate bond. The corporate bond publisher should accept investors' inquiry publicly while carrying on the disclosure of information, hold the meeting of inquiring in the appointed network, and answer investors' questions. Fourth, perfect the security mechanism of the corporate bond. On one hand, in the course of the corporate bond issue, popularize the mechanism of the specialty actively, and allow the corporate of high credibility to choose whether it is secured independently or not. On the other hand, strengthen the management of guaranteeing and supervise the guarantee of the commercial bank strictly. Supervise the commercial bank to strengthen the construction. Fifth, set up and perfect pricing mechanism of market risk of the corporate bond. There are two kinds of comparatively feasible ways at present: utilize the system of long-range bond issue to bid competitively and underwriting syndicate members, with publisher and main consignee taking the leading position, confirm issue interest rate or price of bond;draw lessons from ways of net pricing issue of the stock and transferable bond and utilize the information network to confirm every investor's subscription amount directly through methods of applying to purchase the lucky number, thus promote the market price's taking shape indirectly effectively. Before finishing the revision of Regulation, confirm the issue price of the corporate bond through the market-based way within the upperlimit of the fixed interest rate. Sixth, perfect corporate loan investment agent structure and allow financial institution such as banks to participate in the deal of the corporate bond. Seventh, allow the corporate bond to transfer and circulate in the bond market of the banks.