Research On Credit Risk Of City Investment Debt In Jiangsu Province

Since the fiscal decentralization reforms in 1994,Chinese had established the "level of government, level of powers "financial system,than lead to local government powers and financial powers unequal and funding gap is increasing congtinuously.On the one hand ,with the acceleration of city construction, the regional demand for capital is increasing.On another hand,our country has made a regulation that local government not be allowed to issue bonds on their own.To solve the limitation for city developing by the system,the local government actively established local government financing platform for financing.In 2008,For against the global finaneiale risis,Chinese government adopted a 4 trillion to stimulate the market economy.In 2009,The State Council has promulgated laws to stimulate the local government do project financing by the financing platform,so that the amount of the city investment bond had raised dramatically. According the 2014 statistics,The quantity of the city investment bond issuer have reached 837,and the scale of debt have reached 3.9 trillion yuan. With the arrival of repayment peak in 2015, the credit risks can’t be ignored. As an economically developed province, The scale of Jiangsu city investment bond ranked first in recent years. As credit rating of the main issue bonds continues to drop, the credit risk grows continuously. So It’s more meaningful to research the credit risk of the bonds.The paper adopts theory and demonstration method,studies the influence factors of the credit risk of Jiangsu city investment bond and the default risk. The paper has established two models.The first model is to study the influence factors of the credit risk of city investment bond and conclude that the the strength of local government, the company’s profitability and operating capacity, capital scale and credit as well as bond’s liquidity have significant influence. The second is to forecast the default risk of Jiangsu city investment bond in the next 4 years by KMV model, The results reveal that the debts has over the security cordon and probably has some risk. Between 2016 and 2018, the Bond scale is within the reasonable issue size, there is no default risk at present.But the result of pressure test reveal that the credit risk have strong sensitivity to debt scale, the actical put forward some effective policy Suggestions based on the above study at the end of the article.