A Study On Influence Factors Of Municipal Corporate Bond Issuing Interest Rate

Municipal corporate bonds are issued by the local government financing platform,which have special status and significance in China,the emergence and the development of it is with Chinese characteristics.As direct financing tool,municipal corporate bonds are made up of the tax reform,the old "budget law" and the policy of intensifying the construction of infrastructure and promoting economic development.Local government financing platform undertake a large number of public welfare projects,because of lacking the ability of generating cash flow,local government usually increase their revenue and profits through fiscal subsidies and expand the platform scale by injecting assets in order to satisfying the financing standard stipulated by the state.Investors generally believed municipal corporate bonds are backed by local government credit,when the enterprise is difficult to repay,the government must take rescue actions.This is called implicit guarantee which makes investors ignore financial indicators enterprise operating related to expected default loss and leads to excessive abuse of the government credit and disregarding for enterprise credit.As a result,municipal corporate bonds market has the characteristics of non-market issue pricing,which seriously hinders the healthy development of China's bond market and affect the reasonable allocation of market resources.'Opinions on Strengthening the Management of Local Government Debt',which is released on October 2nd 2014 clearly draws a line between government and stipulates that government debt can only be raised by government and its departments and shall not be raised by enterprises and institutions,which means that government financing functions of local government financing platform is stripped,so is implicit guarantee.This would make a significant impact on municipal corporate bond market.In addition,the New Budget Low enacted on January 1st 2015 makes implicit guarantee explicit and implicit guarantee mechanism faced quit the stage of city market.Market risk pricing mechanism of the municipal corporate bonds may be changed greatly due to government's policy.This article analyzes the influence factors on the municipal corporate bonds respectively according to samples of 2014 and January 1st 2015 to September 30th 2016,and compares the results.In addition,by analyzing influence factors of coupon interests,we can seek breakthrough to improve municipal corporate bonds market,even though bonds market.The results show that the budget revenue of local government index is no longer considered by investors after 2015,which shows that to some extent the implicit guarantee mechanism is weakened,the policy has produced certain effect.Rating results have always been considered by investors who depend on rating results so much when pricing,so promoting the development of credit rating is quite important and pricing mechanism is not normative.Investors never pay attention to financial indicators,which reminds us the importance of perfecting the issuers of financial information disclosure system and investors rarely pay attention to the quality of issuers.