The Study On The Credit Risk And The Feasible Scale Of Quasi-municipal Bond

Although the central government had control government financingthrough government financing platform the issuance scale ofquasi-municipal bond grew very quickly in2012. Meanwhile the expiryrisk of the huge quasi-municipal bond has also grown correspondingly. Theoutbreak of the debt crisis in Europe was a wake-up call for localgovernments in China. China’s new session of central economic workconference pointed out that local government should firmly guard againstsystemic and regional financial risk. In this context research about creditrisk and feasible scale of quasi-municipal bond has great practicalsignificance.Firstly this paper has introduced the current condition ofquasi-municipal bond market. Secondly analyze the factors which have aninfluence on the issuance scale of quasi-municipal bond and convinced thatthe indicator of land income and industrialization rate has the most distincteffect on the issuance scale. Based on the above research further study onthe affecting factors influencing the credit risk and find that fiscal incomeespecially land revenue is the main factor. When there is a mismatchbetween the goals of local economic growth and the financing power credit default would happen. Further calculate the feasible scale ofquasi-municipal bond of ShangHai,JiangSu and ZheJiang province throughKMV model. Finally give suggestions based on the study about theexperience from oversea developed market.