The Effect Of Implicit Guarantee On The Rate Spread Of Urban Construction Bonds

Urban construction bonds refer to the bonds issued by local government investment and financing platforms and is a product of China's special circumstances.Local government investment and financing platforms have raised large amounts of funds through issuance of city-funded bonds,and have made certain contributions to local construction.Because the local government investment and financing platform has a certain governmental property,when the bond market is issued,the interest rate of the issuance interest rate relative to the same term treasury bond will be affected by the government.The investor will think that the local government has guaranteed the bottom and is in default.The risk will be reduced,and the rating agencies will also use the financial resources of local governments as the basis for rating,so that the issuance interest rate for urban investment bonds will be affected by the local governments to which the issuer belongs,that is,the so-called "implicit guarantees".With the increasing attention paid to the local government debt problem,the city's investment bonds and local government investment and financing platforms have also been treated as an important means of controlling local government debt.They were abandoned after "No.43",although the city's investment bonds are still being issued.However,the state has no longer acknowledged that these local government investment and financing platforms have something else apart from the shareholders' relationship with the local government,and they also do not allow local governments to cover all local government investment and financing platforms.The implicit guarantee appears to have lost its foundation.Is that really the case?The purpose of this paper is mainly to construct the model of the impact of implicit guarantee on the issuance spread of urban investment bonds,and to explore whether the effect of implicit guarantee on the issuance spread of urban investment bonds is weakened or even disappeared after "43".To verify whether the "Document No.43"has achieved results.The research method is based on the study of the mechanism and model of the impact of implicit guarantees on the issuance spread of urban investment bonds.The study uses the urban depository bond spread as the explanatory variable,implicit guarantee and each control variable as explanatory variables.The effect of implicit guarantees on the issuance spread of urban investment bonds has changed after the"Paper No.43" became effective.As a result,it was found that the issuance spread of urban investment bonds issued during the three years from 2015 to 2017 after the issuance of "Document No.43t" is still significantly affected by the invisible guarantee,but it has a certain degree of influence compared to that during 2012-2014.Weakened.The conclusion of this study is that "No.43 Document" has weakened the implicit guarantee effect on the interest rate spread partly,but failed to expunge the effect.The innovation of this research mainly lies in the comparison of the implicit guarantee level before and after the issuance of "Document No.43",and studies the change in the degree of implicit guarantee of "Document No.43" and in the study,when choosing variables,the experience of internship has made a choice that is closer to the primary market of bonds.This study has a certain significance for the settlement of local government debt problems and the development of China's bond market.