A Study On Influence Factors Of City Investing Company Issuing Interest Rate And Scale

City investing company is also known as the local government financing platform,which refers to the urban construction investment company established by the local government in order to finance the investment and construction of the urban infrastructure.These companies can basically meet the financing standard by constructing an asset and cash flow through the land and other assets allocated by the local government.The company,if necessary,supplemented by financial subsidies as a repayment commitment,focusing on using funds on municipal construction,public utilities and other projects.As direct financing tool,municipal corporate bonds are based on the 1994 tax reform,the old " Budget Law" and other relevant regulations,as well as undertake the local infrastructure construction in response to the national economic construction.Most of the local government financing platforms don't have profitability,and the government needs to achieve scale expansion by means of financial subsidies and land injection to meet national standards.Therefore,municipal corporate bonds are also known as "quasi-municipal bonds",implying that they have endorsements of local government credits,and investors often expect"just-received" and "local government implicit guarantees".It is this kind of expectation that investors ignore the expected default loss and profitability of the city investment platform.The strong expectation of the government has made the city investment bond have non-marketization characteristics in many aspects,which inevitably increases the risk of the city investment platform settled up.In recent years,the state has issued a series of policies to regulate local government debt.City investment companies are under tremendous pressure to transform.In 2014,the State Council issued the "Proposal on Strengthening Local Government Debt Management" to establish a "borrowing,using,and returning" local government management mechanism.The new Budget Law will be implemented on January 1,2015,clearly defining the boundaries between the government and enterprises,and stipulating that local governments can issue debt financing,and in the future,the government can no longer borrow through enterprises,institutions,etc.,highlighting the national hope.The determination to break the implicit guarantee.The consequent outstanding performances of frequent market bond defaults in recent years,from non-default in early years to increased defaults in recent years,indicating that only relying on local Government implicit guarantees do not mean that nothing is lost.Traditional rigid redemption thinking needs to be re-examined in the current bond market environment.With the government's financial support means not sustainable development,city investment companies must strengthen their comprehensive capabilities,pay attention to their own profitability and asset structure adjustment,and strengthen their own competitiveness.When the development of suburban investment has entered a new era,the transformation is imminent.This paper intends to explore the influencing factors of the financing of the city investment platform,and explore the financing factors affecting the city investment platform from the perspective of the financing scale and financing interest rate of the city investment company.Model attribution and outcome testing can provide a reference for us to understand the quality of local government debt and the potential systemic risks of debt.This paper takes the corporate bonds issued on the city investment platform from January 2015 to December 2017 as a research sample,and uses panel data fixed effect regression to explore the factors affecting the scale and interest rate of corporate bond issuance.The research results show that the scale of bond issuance of the city investment company in 2015 is affected by the company's financial factors and local economic conditions,and the platform companies with better financial status are less dependent on debt issuance.With the Balance of local government bonds,the rise of fixed asset investment,and the recent increase in bond defaults,the weakening of the local government's beliefs has had a negative impact on the size of bond issuance.The impact of private enterprise defaults on local bond issuance is relatively small.However,local state-owned enterprises or enterprises with state-owned assets defaulted to break the "faith" of financial institutions' rigid payment to local governments,and the reduction of the scale of bond issuance by the corresponding regional investment companies is more significant.The cost of issuing bonds by platform companies is mainly affected by bond maturities,ratings and local economic factors.The increasing debt default incidents in recent years have increased the cost of issuing new debts.Local deficits,default amounts,debt Balances,and other indicators that reflect government guarantees have had a significant impact on the cost of issuance.However,the financial factors of the city investment company have no significant impact on the cost of issuing bonds.On the one hand,it shows that investors lack rationality and ignores fundamentals.On the other hand,it also reminds us of the importance of establishing a sound financial disclosure system for the current urban investment bond market.It reflects that the market pays insufficient attention to the company's financial indicators,and the government's implicit guarantee ability is still an important indicator for observation.At the same time,the paper adopts sub-sample group regression method to test the robustness of the model.The main empirical results of this paper are still significant.The biggest innovation of this paper is the introduction of bond default indicators in combination with social hotspots.Through the combing of the default amount of local bonds and the nature of defaulting enterprises,research shows that bond default has negatively affected the scale of local bond issuance and bond issuance rate,and strengthens the city investment platform.Debt risk management has become a top priority.