The Research On The Issuing Size Of Chinese Listed Companies Based On Credit Risk Using KMV Model

In recent years, more and more Chinese enterprises are eager to issue corporate bonds. Thus, how to develop bonds market healthily and steadily becomes the focus of public’s attention. In order to measure the credit risk of corporate bonds, this paper will delimit credit risk of corporate bonds and analyze its source and internal logic. Besides, we will introduce a world-famous measuring model in credit risk field called KMV, and then put the data of Chinese listed companies into empirical analysis. Based on the research above, this paper will give some suggestions about the development of our corporate bonds market.Credit risk management of corporate bonds can be divided into three parts: investigation before release, disclosure of release and ongoing monitoring after release. At present, China’s corporate bond issuance system is in a transition phase from a strict approval system to a market-based registration system. In order to reduce the impact of credit risk to the market, regulators must implement a certain control on the issue size of corporate bonds. So this paper will start with the factors of credit risk in corporate bonds, and then calculate credit risk of listed companies by using static and dynamic models. At last we will reverse the KMV model by assuming a certain default risk to calculate the maximum feasible scale of bonds issue and give some sound suggestions.Until now, the reform of corporate bond issuance system is only the first step in this country’s financial system based on market economy. In order to develop our bonds market healthily, we should not only reasonably control the growth of its scale, strengthen the institutional building of bonds market, but also enhance the ability of self-innovation and intensify the development of credit risk measurement models to improve the existing credit rating technology. Finally, we will prevent the credit risk of corporate bonds scientifically and effectively.