The Research On Factors Affecting The Issue Spreads Of China Municipal Bonds

From 2008 to 2015,municipal bonds issued about 5898.747 billion.With the gradual expansion of municipal bond,the credit risk is gradually accumulating.In this context,it's important to study the coupon rate and issue spreads of municipal bonds.Based on the statistical analysis of the 5601 municipal bonds in 29 provinces,this paper found that the coupon rate is affected by administrative level,ways of security offering and budget revenue/GDP.The results are summarized as follows:(1)Provincial municipal bonds' coupon rate is lower than the prefecture-level city;(2)Public offering municipal bonds' coupon rate is lower than the private offering municipal bonds;(3)Budget revenue/GDP has negative impacts on coupon rate of municipal bonds.Based on the theoretical analysis of influencing factors of the issue spreads,we use weighted least squares and principal component analysis methods to empirical analyse the credit spread of local state-owned enterprises,fixed rate,non-options,medium-term,unsecured municipal bonds.In the process of concrete empirical analysis,because the previous research may not consider new debt,according to whether the model is intrduced into “new debt scale/GDP”,this paper build two kinds of models and analyse the empirical model results to investigate whether “new debt scale/GDP” affect the issue spreads.The empirical results are summarized as follows:(1)The level of economic development is negatively correlated with issue spreads;(2)Generally speaking,budgetary revenue/GDP is negatively correlated with issue spreads,but for the region with lower budgetary revenue/GDP and the cities with higher budgetary revenue/GDP in Jiangsu province,when the issuance of bonds is too large,the increment of budgetary revenue/GDP will lead to the expansion of issue spreads;(3)The level of financial marker development is negatively related to the issue spreads,but when the bond issuance is larger and the growth rate is high,the improvement of the service efficiency of funds(loan-to-deposit ratio)will promote the expansion of the issue spreads;(4)The policy affect the issue spreads by affecting the issuance scale of municipal bonds.Affected by the policy,when the issuance is larger and growth rate is higher,the issue spreads will increase;on the contrary,the issue spreads will be reduced.(5)Affected by regional market liquidity,external financing capacity and debt risk,when the municipal bonds' issuance is small,the increase in the size of new debt will promote the lower issue spreads,and on the contrary,the increase in the size of new debt will promote the increase of the issue spreads.(6)GDP growth has positive impacts on issue spreads of municipal bond.(7)Affected by inventory,accounts receivable and other low liquidity assets,the non-regular financial management of financing platform corporate,the difference of the government financial support and investors may be more focused on the local economic strength and financial strength,the impact of company's financial indicators such as the current ratio,long term debt ratio,and asset-liability ratio on the issue spreads is quite different from the theory expected results.