Empirical Study On The Influence Of Credit Rating On Chinese Bond Issue Market

A mature bond market is a cornerstone of the country’s financial markets and the implementation of national macro-control conduction important carrier of the central bank’s monetary policy. And it plays a vital role in the long-term development of the entire country’s economy. In recent years, China’s bond market has been developed rapidly, its scale greatly exceeds the scale of the stock market, which exceeds the scale of the bond market just years ago. The total of our bonds has increased a lot, and the types have been greatly enriched. However, the share of corporate bond is still too small. The financial channel of corporate bond isn’t well developed. And one of the most aspects to develop corporate bond market is to improve our credit ratings market.In the current market environment, credit is the core of economy and financial system. This phenomenon is far more apparent in bond markets. However, China’s bond credit rating industry is immature and backward. Many literature carried out studies on this issue, but the conclusion is different. So it is necessary for us to study the actual influence of domestic bond credit rating industry on the bond market, and the help us to be better targeted to the development of China’s bond credit rating industry.In this paper, we use data of short-term financing bills, medium-term notes, corporate bonds and company bonds during the2008-2014period, calculate and modify the yield to maturity of the issuance of bonds, remove the influence of the benchmark interest rate. First, we describe the statistical characteristics of issue interest rates and issuance spreads of current bond market, indicating that the credit rating may be important factors affect the bond issuance costs. Then, an empirical analysis is made on the influence of credit ratings upon corporate bond market pricing by using significance test with selection of corporate bonds issued in the years of2008-2013for the study of samples, which illustrates that the credit rating has a significant influence on the bond issue market. Finally, we use the bond pricing model to study the economic meaning of credit rating. Based on the empirical analysis, we give the final conclusion and suggestions about how to well develop the credit rating industry.