The Study Of Development Of Domestic Credit Rating Industry

The role of the bond credit rating agencies in the capital markets are subject to widespread concern and discussion after breaking out of Europe debt crisis. No exaggeration to say, the activities of rating agencies can impact on the bond market and a country’s economy, even on the global economy. Credit rating agencies is so important that many sovereign states have proposed to establish their own credit rating system to protect national financial security.The other hand, China’s domestic credit rating industry, since the birth of the1980s, grew up accompanied by the development of China’s bond market quickly. However, there are still many outstanding issues in the bond rating industry in China. There are problems in the external environment of the development of the industry and itself, such as limited market demanding, legislation lag of the credit rating, inefficiency supervision, lack of mechanism to punish and exit, lack of effective test of rating, low rating technique, poor internal control system and so on.On the one side, we need to promote China’s bond rating industry to upgrade standards, and expand the influence on the development of financial markets; on the other hand, China’s bond credit rating industry is immature and backward. So it is necessary to us to study the actual influence of domestic bond credit rating industry on the bond market, and then help us to be better targeted to the development of China’s bond credit rating industry.Many literature carried out studies on this issue, but the conclusion is different. Some papers think. China’s bond rating industry has no influence on domestic bond market, and their rating conclusion are unreliable; however, there are some scholars indicate that, the bond credit rating agencies contribute to the development of China’s bond market and the conclusion of the credit rating have significant impact on the formation mechanism of the bond prices. Therefore, this article attempts to explore the development of China’s bond credit rating industry from the point of view of the role of bond credit rating agencies in bond pricing.In this paper, we use data of corporate bonds, corporate bonds, medium-term notes and short-term financing bills during the2007-2011period, calculate and modify the yield to maturity of the issuance of bonds, remove the influence of the benchmark interest rate.First, we describe the Statistical characteristics of issue interest rates and issuance spreads, found that the issuance of bonds interest rates and spreads have increased with the decreasing of credit rating, different types of bonds change in different amplitude, indicating that the credit rating may be important factors affect the bond issuance costs.Then, we study the influence of credit rating on the bond issuance costs using empirical analysis. We selected seven years to maturity and about1billion issue size of corporate bond to be sample, found that the different of the yield spread are not significance in group of same bond rating、the same issuer rating、the issuer rating as well as the bond rating; but dominant sample of both bond ratings and issuer rating has issue spreads advantage to the others. That means that the credit rating has a significant influence on the bond issue market.Finally, we use the bond pricing model to study the economic meaning of credit rating. It was found that the bond rating was a significant negative correlation between the issue spreads, the higher the rating scale, the issuance of bonds spreads the lower. The credit rating information can significantly affect the bond issuance costs, the information value of the credit rating has been recognized by the market, issuer and investors. For different types of bonds, the influence of the bond credit rating for issuance costs are different. The rating information’s influence on the issuance costs of corporate bonds, corporate bonds, short-term financing bonds and medium-term notes in order. The issuer rating information and bond rating information are both important to bond market, however,they play in different role in different bond type.