The Credit Risk Measurement And Prevention Of The Local Government Investment And Financing Platform Corporation Of Tongzhou District In Beijing

As the important media of local government to raise funds, support local infrastructure construction and other public spendings, local government investment and financing platform developedrapidly since 2009. At present, the local government debt has reached its alarming scale. To support local urban public spending, financial support is needed, but the credit risk should not be ignored.On July 11 2015,Beijing Tongzhou District was officially confirmed as thesub-center of Beijing City, which caused the conflict between the following large-scale urban construction and high risk of local government investment and financing platform at present stage. For Tongzhou District, how to raise construction funds through the investment and financing platform with high efficiency, and how to avoid the potential threat of investment and financing platform for credit risk? This is a problem which needs to be further studied in this paper.Based on the background of Tongzhou District investment and financing platform and the basis of research experience about the local government investment and financing platform, using the methodof theoretical analysis, field survey, mathematical model and statistical method, this paperstudied the theoretical basis of local government investment and financing platform,the financing model and potential problems of Tongzhou District investment and financing platform, the external environment of Tongzhou State-owned Assets Management Corporation and investment and financing platform ability of debt and credit risk. The KMV modeland the liabilities model used in this paper also provides a method for the similar research in the future.This paper finds that:(1) The financing mode is single and business profitability is not high for Tongzhou District investment and financing company, and the diversification of financing mode, capital source and business is requiredfor long-term steady development;(2) The ability to grasps the opportunity and cope with threats is on the average forTongzhou State-owned Assets Management Corporation, but still has great room to improve;(3) In the next 30 years, debt is not serious enough to lead to the debt crisis, but continued rising of debt accumulation and asset-liability ratio is inevitable;(4) The probability of default will gradually rise with the increase of the ratio of project financing, andthe financing ratio should be controlled below 30% in order to make the loan a safety rating.Based on the research conclusions, this paperputs forward several political suggestions about how to improve the financing pattern, how to response to the external environment and how to control the total amount of debt and credit risk.