Factors Effect On Initial Public Offerings Pricing Of China Private Placement Bond

For every developing country, small and medium-sized enterprises "SMEs" is very important. Although many SMEs have good operating performance, they are financially constrained due to reasons including huge business risk, low credit rating and lacking collateral.In May 2015, China issued its first exchange trading private placement bond. This new market loosened many former restrictions to bond issuer in order to make it accessible to more SMEs. This exchange trading private placement bond has been created for a period of time, and it also ineluctably appears some problems. For example, the initial public offerings' rate of bond is twisted by the expectation of government rigid repayment and the new market also lack of credit risks allocation measure.Therefore, this paper is committed to analysis factors effect on IPO pricing of China exchange trading private placement bond through theoretical analysis, mathematical modeling combined with empirical research.For a sample of 414 IPO of private placement bonds from exchange trading market from May to December 2015, this paper study the relationship between private placement bonds' IPO and features of the issuer though multiple linear regression model. The factors considered including scale, maturity, ranking etc. The empirical results indicate that the nature of the issuer, bond ranking, GDP ranking of issuer's location and one month Shibor are significantly correlated with the price of private placement bonds' IPO.The core of this article is giving some feasible suggestions to solve the problems related of the small and medium-sized enterprise private bonds. Firstly, it is necessary to break rigid repayment gradually. Secondly, build a uniform market for all kinds of private placement bonds to create better fluidity. Thirdly, provide sinking fund to control credit risks of the market. Fourthly, introducing the market maker system to the market.The contributions of this paper are mainly reflected in the following areas:(1) Private placement bonds is a new variety of bonds for China, there are a few studies on its pricing ability. (2)Analysis bond IPO price based through stock IPO analyze methods, provide a new approach to research Private placement bonds market.