Research On The Impact Of Credit Rating And Guarantee Mechanism On The Cost Of Enterprise Bond Financing

With the steady growth of China's economy,the expansion of corporate financing needs and the improvement of investment and financing system,China's enterprise bond market has developed rapidly.As an important means of direct financing for enterprises,issuing enterprise bonds can optimize the capital structure of enterprises,reduce the financing costs of enterprises,and enhance the market competitiveness of enterprises.The existence of information asymmetry and principal-agent problems in bond market has led to the decline of financing efficiency of enterprises and the increase of the bond financing cost.The credit rating and guarantee mechanism,as important credit measures,can alleviate these problems in the bond issuance market.Therefore,this paper mainly analyzes the impact of credit rating and guarantee mechanism on the financing costs of enterprise bonds.In this paper,the research sample is all the 2950 public issuance enterprise bonds from2008 to 2016 in Shanghai and Shenzhen Stock Exchanges and inter-bank market.The paper analyses the present situation of the development of enterprise bond market in China.On basic of asymmetric information theory and principal-agent theory,this paper puts forward the research hypothesis to carry out empirical test and results analysis.In determining the cost of enterprise bond financing,the coupon rate and credit spread are used as measure standard,credit spread is determined by deference between the coupon rate of enterprise bonds and yields on corresponding treasury.The results show that there is a significant negative correlation between credit rating and the enterprise bond financing cost.In other words,the higher the credit rating,the lower the cost,and bond rating is more obviously than firm rating.In addition,guarantee could increase the cost of enterprise bonds,guaranteed bond financing costs are lower than non-guaranteed bond financing costs.Finally,according to the current situation of the enterprise bond market in China and the research conclusion,the suggestions which involve accelerating development of bond market and reducing bond financing costs are proposed from four aspects:perfecting market supervision mechanism,designing diversified enterprise bond varieties,developing independent and objective credit rating mechanism and regulating enterprise bond guarantee system.