Research On The Survival Value Of Local Government Investmentand Financing Platform And The Improvement Of Urban Investment Bond Issuance Mechanism

In this paper, we implemented a systematic research about the local government investment and financing platforms, as issuers of Municipal Bond, whose debt paying ability and operation ability affected issuing interests. Based on data of 5/7/10/15 years period bonds from 2010 to 2015,we have conclusions below: Firstly, asset-liability ratio has played an opposite role in issuing interests, it is to say that if issuers had higher liability level, they would have urgent need to decrease cost of financing through bond market. Secondly, macro-environment and regional economic situation had significant effects on bond issuing, in the meantime, the operation abilities have significant effects on bond issuing, it indicates that financial conditions of these companies could be identified by the market, the marketization should be increased. These conclusions have referential values on market-oriented reform of local government investment and financing platforms and issuing process of Municipal Bond. Thirdly, the higher degree of marketization of local government, the higher effectiveness can the company be recognized by the market. The higher degree of marketization is often corresponding to more developed provinces in the eastern region, so they have good urban construction and operate well. In the process of issuing city investment debt financing, the market can provide lower financing cost to those provinces, reflecting that the bond spread is low. After controlling the other factors, the higher debt-paying capability, the lower bond interest spread the company has. But the effect is not significant when the market fails to identify this situation effectively. This paper adopts the measure of pre-determined EBITDA/interest expense in the annul report as the indicator of debt-paying capability. For debt paying pressure is low, these companies mostly locate in the less-developed provinces in the Midwest region, they have slow process of marketization and single financing channel, their financing source is scarce, the funds raised for the project are limited in cash return, so the market fund provider requires a higher return on capital. And the trend of "low in the western region high in the eastern region" is presented. The companies' operation capacity can be effectively recognized by the market. After controlling other factors, the higher degree of marketization of the province which the city investment platform locates, the lower bond interest spread they will have in the issuing process of city investment bonds.These conclusions are of great significance to the market transformation of local government investment and financing platforms and the issuance of city investment bonds.