Financing Cost Analysis Of Privately Raised Bond For Small And Medium-sized Enterprises

Financing difficulties exist extensively among SMEs(Small and medium enterprises)in our country。As the most active part of our country, SMEs are of great significance inthe national economic; while SMEs’ development and growth has been constrained by theshortage of funds. Using financial innovations to support SMEs and the real economy isan important task of the country currently. The issuing of privately raised bonds in May2012brings hope for SMEs, and is expected to narrow the gap between China anddeveloped countries in the bond market further.This article describes the status of SMEs’ financing, summarizes the reasons offinancing difficulties of SMEs in China from the perspective of credit financing, bond andother direct financing manners, analyzes and compares privately raised bonds with otherfinancing manners for SME financing adaptability. Using the data of China securitiesdepository and clearing co., LTD, we sum up the issuance situations of private debt in thetwo markets, the actual data shows us that private debt really help SMEs to get out offinancing difficulties and satisfy their money need for expansion; choosing12xinli debtand13Xincheng debt out of those successfully issued private debt as our studying cases,we analyze and compare them from the benchmark bond interest rates, bond maturity,bond credit risk, the main issue of the financial condition by the debt theory, discuss thefinancing cost of private debt and believe small size, non-transparent informationdisclosure, information asymmetry may resulting in higher financing costs as they canbring about adverse selection and affect the enthusiasm of investors. On this basis, wesummarize the current problems of private debt issue and made our recommendation.