Research Of Credit Risk On The City Investment Bonds

This study made an indepth research into the development of municipal bond in US and based on the similarities and differences between those in US and City Investment Bond in China, we propose several plausible suggestions to effectively control the credit risk.City Investment Bond of china has developed more quickly in recent year, and has attracted more and more attention. We first find out the most important factors in analyze the qualification of a City Investment Bond. And then we create a system for categorizing different bonds based on several factors:local GDP, asset scale, debt-to-asset ratio and so on. Finally we use Jingcheng bond to illustrate our method.City Investment Bond is one major method of direct financing, compared to credit loans from banks. To raise enough money for urban construction and public wealth, City Investment Bond is created to partially replace loans to avoid the problems:high upward floating interest rates;limited quota for individual coperation and company; and potentially long time for the loans to be approved and finally distributed.