Research On The Credit Rating Of Local Government Bonds In China

Since the reform and opening up,along with the development of the national economy needs,especially the international financial crisis in 2008,the local government borrowed lots of debt without permission to issue government bonds in order to rapidly develop the regional economy and stimulate economic growth.With the gradual expansion of the debt,our country is aware of the dangers of this the hidden debt.In order to strengthen the management of local government debt,the National Audit Office conducted a comprehensive audit of local government debt.In2014,our country selected 10 provinces and cities,including Beijing,Shanghai,Shenzhen,Jiangsu and others all as local government bond issuance pilot.In order to strengthen local government debt management,prevent the risk of bonds default,the credit rating of local government bonds is established,and the local government bond credit rating is getting more and more attention,the importance of local debt credit rating has been widely recognized after the new “budget law” regulations of permitting the local governments to issue local government bonds being implemented for the first time in 2015.This paper starts on the current reality,aims to research the problems that related to China local government bond credit rating,and lay the theoretical foundation for the following research based on the interpretation of risk theory,information asymmetry theory and reputation theory.Through the analysis of the basic situation,problems and reasons,this paper introduces the three stages of the credit rating of local government bonds from prohibition to exploration and then to full liberalization,and it also reveals that there are still some problems in the current credit rating of local government bonds,such as low discrimination of rating results,unverifiable accuracy and so on.Through the method of combining qualitative and quantitative,empirical analysis of the local government bond credit rating of 10 provinces,and using the statistical methods to analyze credit rating scoring and ranking the local government bonds of 10 provinces,it proposed enlightenment from three aspects to improve the local government bond credit rating.At the same time,based on the existing local debt rating problems of previous analysis and practice of the enlightenment,the end of the paper puts forward policy suggestion to improve the local government bond credit rating from the three aspects,aims to mitigate the current local government bond credit rating problem,and promote the healthy development of the local government bond credit rating.