Research On City Construction Investment Bonds’ Issuance And Risk Management

City construction investment bonds are essential to economic construction, with thefurther development of socialist market economy in our country, the city constructioninvestment bonds will undoubtedly play a significant role. As a local investing andfinancing platform, city investment enterprises raise money by issuing corporate bondsunder the guarantee of local governments. On one hand, it effectively promotes the localinfrastructure, improves urban living conditions and develops the provincial economy. Onethe other hand, it exerts a positive effect on the improvement of companies’ directfinancing proportion、governance structure and the healthy development of bond market.However, there are some problems that cannot be ignored during the issuance of cityconstruction investment bonds. Financial risk is the first. Because the local governmentserves as implicit guarantee for the construction investment companies, its debt scales areimbalance with local fiscal revenue, which leads to fiscal crisis on the verge of breakingout. The second are credit crisis and debt risk. The city construction investmentcorporations often have higher credit rating than others owing to the shelter of government,which can easily become uncertain risk factors. Meanwhile, as city investmentcorporations play agency bond issuers for local government, some blind investmentbehaviors of government would induce high company’s debt ratio and then the debt crisis.Therefore, it is necessary to prevent and control the risk for the city constructioninvestment bonds’ financing projects.In next chapters, relevant theories and methods are employed to study the issue of cityconstruction investment bonds’ operation and risk management. Firstly, we elaborates therelated concepts of city construction investment bonds and analyzes its theoretical basis,then discuss the necessity and feasibility of city construction investment bonds’ issuanceproblem from the perspective of foreign countries’ experiences and its development in ourcountry. Secondly, an introduction of issue terms、operation process、listed circulation andregulation are presented for our country city construction investment bonds. Based on thisfoundation, we further discussed the operation patterns and potential risks in the issuanceprocess, and corresponding measures for risk are put forward consistently. Finally, the cityconstruction investment bonds financing project of A company in Chong Qing city aretaken as an example. We analyzes the project from the four aspects of local finance、affiliated industry、business activity、corporate finance and suggestions are proposed to the potential risk factors. Furthermore, a bond spreads prediction model under risk factorsis established and the empirical reveals the rationality of proposed model. Through theabove analysis, this paper proposes some meaningful suggestions for city constructioninvestment bonds’ financing in our country, for the sake of making it more close to thesocial practice, and better serve to the regional economy construction.