A Study On The Credit Rating Of City Investment Bonds

By the end of 2016,the city investment bond scale has more than 3.26 trillion in China bond market,which is an increase of 0.21 trillion with the end of 2015.Due to the stock bond continued and the newly bond issued for the construction project,the city investment bond remain modest growth.In the background of macro economic transformation and revising,the method and the basic of credit rating have take some changes for the city investment bond.This paper focus on the investment practice of credit bonds,reviewed the historical literature of credit rating,and combined with the characteristics of China bond market especially the city investment bond of inter-bank bond market,we dig out the key factors which can determine the credit rating of city investment bond.In the base of not divorced form the theory of credit rating and the characteristics of city investment bond,we can integrate the credit rating of city investment bond in simply and quickly,which can provide the investment decision for the rapidly credit evaluation in practice.First of all,we analysis the characteristics of city investment bond of China inter-bank bond market,combined with the investment practice,we get that local government administrative level and local economic strength account about 66%,the scale of local financing platform account about 29%,and the financial indicators which reflect the operating status of the economic main body account about only 5% for the credit rating of city investment bond.Secondly,in this paper,we propose a credit rating model which can get the credit rating of city investment bond easy and fast in relatively and the model only include five first-grade indicators and twenty-two second-grade indicators which have the indicator such as platform level,local economy,company size,solvency,profitability and so on.Thirdly,on the basis of the original rating model,this paper improves an evaluation model by compare with the credit rating model of D organization.Finally,according to the sample of 1621 city investment bonds,this paper makes a comparison between the three model,namely,the D model,the initial model and the revised model.The results showed that,the initial model and the revised model have accuracy 24% and 40% than the D model on credit rating separately.Further more,repeat sampling and statistical comparison shows that,the initial model is better than the D model,the revised model is better than the initial model on credit rating in the aspects of simplicity,validity,objectivity,comprehensiveness and so on.The main contribution of this paper is that,through the analysis of city investment bond,we get its original characteristics and construct a relatively simple credit rating model form the investment practice,which provide a quick judgment method of the city investment bond credit rating decision in investment practice.