The Impact Of Normalization Of Default On The Pricing Of Corporate Bond Issuance

The bond market of our country develops by replacing the market credit with the government credit,which also leads to the loss of the soil for cultivating the credit risk system of the enterprise bond market.The lack of credit risk makes the bond market lose and do not need real credit risk assessment,and do not need the products and tools needed for credit risk management.At the same time,it is difficult for investors to build their awareness of credit risk,and the government can't get rid of the role of the ultimate bearer of all credit risk.It is not conducive to the marketization pricing of bonds,and hinders the development of bond market.The substantive breach of the "11chaori debt" in March 2014 broke the myth of zero-default in the bond market,after that the bond defaults have occurred frequently,and the rigid payment situation in the bond market has been broken for a long time.The bond market has entered the stage of normalization of default.Normalization of default means that market credit constraint mechanism will gradually replace government credit,and market mechanism will play a decisive role in the allocation of financial resources.Firstly,this paper systematically elaborates the pricing mechanism and then discusses the problems existing in issuance pricing from five aspects:basic interest rate,credit rating,liquidity,government intervention and implicit guarantee.And combining with the impact of default on the behavior of market participants,this paper analyses the changes of credit rating,implicit guarantee,issuance scale and other factors which affecting bond issuance price under the normalization of default.This paper chooses the issuance spread of corporate bond as the factor to measure the marketization of bond pricing,chooses the appropriate variables from the factors of credit risk and liquidity risk that affect the issuance spread of corporate bond,and studies the influence of normalization of default on bond issuance pricing by introducing the cross-item of target variables and virtual variables representing default.The results show that the credit rating can significantly affect the bond issuance pricing after default.The guiding role of rating information on bond pricing and investment is beginning to emerge.The role of rating organization in bond issuance is becoming more and more important.Normalization of default makes corporate bond spreads more sensitive to credit risk information,while the prominent role of corporate nature is not affected by default.The implicit guarantee brought by the nature of state-owned enterprises still exists.Finally,combined with the empirical results,this paper puts forward some suggestions on improving our credit rating system and investor education,so as to promote the healthy development of the bond market.