Research On The Impact Of Credit Rating And Guarantee Mechanism On Credit Spread Of Urban Construction Investment Bond

With the development of the urban construction investment bond market,the scale of China's urban construction investment bond issuance continues to expand.From 2010 to 2014,the scale of urban construction investment bond increased from 321.6 billion to nearly 2 trillion.While,under the background of economic downturn and deleveraging,the large issuing scale of urban construction investment bond has brought a rapid rise in local government debt,and the accompanying huge debt risk may have negative impact on the smooth operation of the bond market and China's economy.Thus,the regulatory policy on urban construction investment bond is getting stricter and stricter.In 2014,the "No.43 Document"issued by the State Council clearly stated that corporate debts could not be repaid by the government for the first time,and started the gradual divestiture of local government's invisible guarantee for urban construction investment bond.In this context,relying on China's current credit enhancement mechanism of the urban construction investment bond from the aspects of credit rating and guarantee mechanism,this paper explores the effect of credit enhancement mechanism before and after the divestiture of government's invisible guarantee.This analysis has reference significance for the improvement of credit enhancement mechanism after the divestiture of government's invisible guarantee,and has certain reference value for the investment of urban construction investment bondFirstly,through literature review,this paper summarizes and evaluates current academic research on this issue,then establishes the research objectives and tasks.Secondly,this paper analyzes the mechanism that how different bond credit enhancement methods influence the credit spreads.Based on the development status of urban construction investment bond,this paper starts from the marketization mechanism after the separation of urban construction investment bond and the government,focuses on the possible relationship between market-based credit rating.guarantee mechanism and urban construction investment bond,proposes three basic assumptions.Thirdly,on this basis,this paper takes urban construction investment bonds issued from 2008 to 2018 as research samples,innovatively compares the data before and after the divestiture of government invisible guarantee,empirically analyzes that how the credit rating and guarantee mechanism influence credit spreads,as well as the relationship between guarantee mechanism and credit rating.The research results show that:First,the credit rating of urban construction investment bond has a significant negative impact on its credit spread,especially with the divestiture of government invisible guarantee.Meanwhile,compared with the debt rating,the subject rating has stronger power in explaining the changes of credit spreads.Second,with the divestiture of government invisible guarantee,the guarantee mechanism can effectively promote the change of credit spreads.Third,the guarantee mechanism plays a mediating role in the process of credit rating affecting the credit spreads of urban construction investment bond.The improvement of the guarantee mechanism can indirectly affect the credit spread by increasing the debt credit rating.On the basis of the research conclusions,combined with the development status and existing problems of credit rating and guarantee mechanism in urban construction Investment bond market,this paper suggests plenty of methods to improve credit rating and guarantee mechanism in the bond market:to improve market-based credit rating mechanism and guarantee mechanism in urban construction investment bond market,to formulate more detailed laws and regulations,to change the rating mechanism of the"issuer pays",to propose innovative guarantee methods for the urban construction investment bond.