Analysis On The Influencing Factors Of Credit Spread Of Urban Investment Bond Issuance In China

As a unique bond type in China,urban investment bond plays an important and special role in the process of economic development and urban construction.China's urban investment bonds refer to non-financial corporate bonds issued by local state-owned enterprises(i.e.urban investment companies)which mainly undertake local infrastructure construction.For a long time,the market has been endorsed.However,the nature of urban investment bonds has changed historically in 2015.Faced with the increasingly exposed hidden debt risks of local governments,urban investment bonds have entered a period of intensive supervision since the second half of 2014.Development and Reform Finance [2014] 43 issued in October 2014,which requires local government financing platforms not to assume government financing functions,and emphasizes that new urban investment bonds no longer belong to local government debt.The New Budget Law promulgated in 2015 clarifies the government and enterprises legally.The boundaries of industry and the risk positioning of urban investment bonds around 2015 are essentially different.Since then,a series of regulations,such as Financial Budget [2017] 50,Financial Budget [2017] 87,Development and Reform Finance [2018] 194,have been in line with No.43 and the new Budget Law,reiterating the separation relationship between government and enterprise debt.Although the regulatory policy in the second half of 2018 has been relaxed to a certain extent,it is still the principle adhered to by the regulatory authorities to ensure that the reasonable financing needs of urban investment companies are met on the premise of adhering to the principle of marketization.Urban investment bonds are in a critical period of standardization and reform.A series of national policies are aimed at standardizing the financing behavior of urban investment companies,preventing local government debt risks,guiding the market-oriented development of urban investment bonds,and creating a healthy bond market environment.In this context,pricing marketization has become an important issue of urban investment bond market reform.This paper will focus on the influencing factors of credit spreads of urban investment bonds in the period of standardization and transformation,using the policy shocks in 2015 as the time dividing point.By studying various types of urban investment bonds,the key factors affecting the credit spreads of urban investment bonds and their changes will be investigated.From January 2011 to September 2018,that is,before and after the promulgation of the New Budget Law in 2015,urban investment bonds(corporate bonds,medium-term bills,corporate bonds)are selected as research samples,and the per capita GDP and the level of the location of the investment company are taken as the proxy variables of the implicit guarantee of the government.The total asset return rate,total asset turnover rate and asset-liability rate of the issuer are taken as the proxy variables.The bank credit amount and total assets index are regarded as the issuer's own financial ability,and when determining the control variables,the macro-factors,bond factors and credit rating factors are synthetically selected to focus on the impact of implicit guarantee of local government and financial factors on the credit spreads of CIC bonds.The impact of the per capita GDP of the local people representing the implicit guarantee is significant,which shows that after the promulgation of No.43,there still exists the belief of urban investment in the market.For the urban investment bonds issued after January 1,2015,the impact of local per capita GDP and the level of the city investment company on the interest margin of urban investment bonds issuance is significantly negative,indicating that the better the financial situation of local governments,the lower the credit risk and interest margin of unsecured urban investment bonds issuance;the stronger the willingness of local governments to guarantee,the lower the credit risk and interest margin of unsecured urban investment bonds issuance.However,the impact of the profitability of CIC on the spread of CIC bonds issuance is polarized.For unsecured CIC bonds,the impact of CIC's profitability on the spread of CIC bonds issuance is significantly negative,indicating that the stronger the profitability of CIC enterprises,the lower the credit risk and spread of unsecured CIC bonds issuance.This result may be due to a series of attempts to divest CIC bonds.With the issuance of policies and regulations on the financing function of local governments,the risk and nature of urban investment bonds have changed to a certain extent,and the hematopoietic function of urban investment companies has been paid more and more attention.For unsecured urban investment bonds,the profitability of urban investment enterprises has no significant impact on their interest margins,which shows that the urban investment companies that need to be guaranteed are like "companies" but "financing tools".Realistic characteristics.