Rigid Redemption And Credit Spread

"Rigid redemption" is a special system in China's bond market.It is essentially a government intervention act,which is a microcosm of government intervention under the planned economy.Based on the description and analysis of China bond issuance system,this paper finds that the government regulators have the motive to complete the rigid redemption and further analyze the institutional factors that may lead to the existence of rigid redemption.In this paper,through the study of the "11 Chaori Corporate Bond" default and the payment of the incident,the government regulators have realized the rigid redemption by allowing the investors to Back Door Listing and by the state-owned holding company to guarantee the "11 Chaori Corporate Bond",then this paper ayalyzed the bond issuance system is how to cause rigid redemption.This paper also validates the market response of the bond market to the " 11 Chaori Corporate Bond "default and the payment event by using the change of the credit spread of the corporate bond before and after the event.First of all,the results show that "11 Chaori Corporate Bond" default collapse the rigid redemption concept of investor,the full payment of the incident has deepened the investor rigid redemption concept,and the full payment of "11 Chaori Corporate Bond" is the result of rigid redemption;secondly,the results show that property right charactor will affect investors to the degree of collapse and deepening rigid redemption.And this paper analyzed that the rigid redemption hindered investors estimating the company a reasonable credit risk.As of the date of writing this article,China still does not have a public Corporate Bond due to bond default and ultimately unable to pay the bonds.Although the "11 Chaori Corporate Bond" default event has taken a small step to break the rigid redemption,but rigid redemption is still deeply rooted in China bond market,The hidden risks of China's capital market still exist.In the final conclusion,this paper argues that the main problem restricting the development of China's capital market is that the government intervenes too much and lacks the market mechanism.With the development of China's financial market,to break the rigid redemption of the time is reasonable,the study can provide some help to China's capital market reform and following research.