A Study On How To Promote The Development Of China’s Corporate Bond Market

Corporate Bond Market is an important part of the whole bond market. Thinking from the macroscopical level, the development of corporate bond market would be a push of the whole bond market, bringing an increase on the proportion of direct financing. While thinking from the microscopical level, the development have the companies get another financing channel besides issuing stocks, which is good for changing the equity financing preference of China’s listed companies, lower the LC’s fund raising cost, optimize the capital structure and improve the coporate governance.In August, 2007,CSRC published <Pilot Rules on the Issuance of Corporate Bond>, and Yangtze Power issued the first China’s corporate bond on 24th September, 2007. Those measures indicates that China’s corporate bond market is on the way, nevertheless, this is only a very start, there will be a long road before it to get to be mature.Based on the above situation, this paper would put focus on studying the development plan of China’s Corporate Bond Market(CBM). The objective is to analysis the development of China’s enterprise bond market and lessons from foreign CBM by understanding the main factors of CBM, then put forward some suggestions on the organization of China’s CBM and some related policies.Detailed studies are as follows:Firstly, the domestic CBM studies is at an elementary stage, which lags behind the foreign studies. The foreign experts study more on the corporate financing decision, CBM operating characteristics and the economic effect of CBM. While the local experts take more attention on studying the importance and impendency of CBM, analyzing the reasons of the slow development of the market, and giving the suggestions to the market’s development. Secondly, this paper has distinguished the concept of corporate bond and other enterprise-level bonds, believing there are four main factors of the CBM, which are product, participant, system and place. And this paper points out the key guideline to evaluate the operating effect of CBM is the liquidity, and to promote the liquidity is also the target of the CBM’s development.Thirdly, the liquidity of the current China’s enterprise bond market is low, and the main reasons of which are the approve of the budget management, issue with interest-control and guaranty, lack of classes and short term, unreasonable investor structure, the wrong trading place, etc.Fourthly, the general development of the foreign CBM indicates, there are some certain same characteristics of the development model of various countries, and almost all countries experienced the low liquidty problem at different degree.Fifthly, by drawing the lessons of foreign CBM and thinking from the reality of China’s CBM, this paper give a design on the whole organization of China’s CBM from the different aspects such as issue, tading, settlement, regulator and drop out. Sixthly, this paper suggests to take more action on enhancing the liquidity of CBM through the direct methods and indirect methods, for the purpose of promoting the development of China’s CBM.