The Influencing Factors Of Credit Spreads An Empirical Study On Chinese Urban Construction Investment Bonds

As one of the financing vehicles of local government, Urban Construction Investment Bonds have been in slow development for a long time. Since2009, however, with the acceleration of urbanization and the financing gap of the4Trillion Economic Stimulating Plan after financial crisis, Urban Construction Investment Bonds has become an important financing vehicle of local governments to solve the funding gap, and risen in a rapid speed. However, the excessive expansion of local government debt contains huge credit risk, especially in2013, with the beginning of local government debt auditing, more and more people show their attention on this problem. Under this background, as direct embodiments of credit risk, the research on Credit spreads can help us to recognize the credit risk of Urban Construction Investment Bonds in our country.By using the combination of theoretical and empirical research methods, this paper aims at researching the factors affecting the credit risk of Urban Construction Investment Bonds. This paper first introduces the concept and characteristics of Urban Construction Investment Bonds and credit risk. Then the paper makes a comprehensive introduction about Urban Construction Investment Bonds in our country(containing the background, development stages and present situation) and extracts the potential factors affecting the credit spread. At last, through the empirical studies, the paper tries to find out the influencing factors of credit spread and the degrees of the influence.This paper extracts7factors through the factors analysis, and gains the conclusions about the directions and degrees of the7factors by using multiple regressions to construct an empirical model. According to the conclusions, the currency liquidity, enterprise scale, profitability, and financial strength of local government significantly affect the credit spreads of Urban Construction Investment Bonds. On one hand, the conclusions confirm the fact that the bond market of our country is still not perfect and the currency liquidity affect the bond prices deeply. On the other hand, the conclusions verify the situation that the Urban Construction Investment Bonds excessively depend on the supports of the local governments. As a whole, the conclusions of this paper confirm the current situations of the Urban Construction Investment Bonds in our country.