Empirical Study On MTN Issue Spreads In Our Country

Since its issuance in April 2008,medium-term notes have attracted many issuers'attention because its registration and issuance procedures are simple.The issuance scale has grown rapidly,it has occupied an important position in credit bond market.At present,a large number of medium-term notes issued in early stages are facing payment due.While China is in the period of industrial restructuring and supply-side reform,some issuers suffered from the deterioration of the fundamentals due to the impact of the macro economy.Shortage of funds,inability to pay off debts resulting in frequent violations.Against this background,empirical study on the issue spreads and default risk of medium-term notes also has following practical significance:First,medium-term notes are valued through the way of bookkeeping,issuers communicate with institutional investors in depth during the road show.There is a strong subjective awareness in the process of determining the issue spreads.Secondly,the first state-owned corporate credit debt("11 Tianwei MTN1")defaulted in 2015 indicating that rigid payment of bonds issued by state-owned enterprise was shattered,and the pricing mechanism was still to be improved.Finally,some of the issuers have continuously defaulted on bonds,triggering a crisis of confidence among market participants.Panic causes irrational collapse in debt market.Therefore,it is necessary to discuss the development direction of medium-term notes.After learning from domestic and foreign scholars' research achievements,this paper makes reasonable assumptions based on issue status analysis and theoretical analysis.In order to explore the factors affecting the issue spreads of medium-term nqtes in China,I divide all factors into three aspects:debt-related,macro-economic,and micro-economic aspects.The regression results are very significant,and the explanation for issue spreads is about 44%.The results of regression show that compared with non-state-owned enterprises,explanation reduces for state-owned enterprises,and the lead underwriters are more likely to exert scale advantages to reduce the coupon rate;increasing issue scale is beneficial to reduce the issue spreads for AAA notes,but risk compensations are required for low-rated notes to increase its issue scale.Then,I analyze the impact of the issue spreads on the default,by using the expected default risk and the actual default as interpreted variables respectively.I innovatively joins nature of equity/operating performance with issue spreads as cross item.The results of the study show that:(1)Issue spreads of medium-term notes are positively related to defaults.(2)Compared with state-owned enterprises,issue spreads have a greater impact on default risk for the notes of non-state-owned enterprises.(3)The better the operating performance of the company,the less significant the impact of issue spreads on default risk.According to the empirical results,this paper proposes the following suggestions:(1)Introduce dual rating mechanism during the first rating,and establish an effective tracking assessment mechanism in the subsequent rating adjustment.(2)Government should reduce debt association degree with state-owned enterprises,and break the rigid payment for state-owned enterprises on the basis of ensuring the stability of the bond market.(3)Improve the quality of information disclosure,reduce the degree of information asymmetry between issuers and institutional investors.