Research On The Influencing Factors Of Financing Cost Of Chinese Medium-term Notes

Since the 1990s,with the expansion of transaction scale,diversification of financial instruments and diversification of market participants,China's financial market has made great progress.Especially in the new century,China's bond market is booming.At present,corporate bonds,short-term financing bonds,medium-term bills and other credit bonds are developing together.medium-term notes stand out among many credit bonds due to their advantages of relatively simple issue procedures,low financing cost,no guarantee.In 2008,the People's Bank of China issued the Measures for Non-financial Corporate Debt Financing Instruments in the Inter-bank Bond Market not only to improve the inter-bank bond market management,but also to promote the development of the non-financial corporate non-financial enterprises direct financing,which allowed qualified non-financial enterprises issue medium-term notes to qualified institutional investors in inter-bank bond market,and it is the symbol of the medium-term notes business officially launched,which is of great significance for direct financing for the enterprises.As a bond issued and traded mainly.in the inter-bank bond market,the issuing subject of medium-term notes is generally an enterprise with legal personality and can realize timely repayment of principal and interest during the existence of medium-term notes.The maturity of MTN is generally between 1 and 10 years,which can effectively meet the enterprise's demand for medium and long-term financial needs.It has become one of the important financing tools for the development of Chinese companies,so it occupies a lot in the bond market.At present,the main investors in China's of medium-term notes are Commercial Banks.The development of medium-term notes is not only important to improving the capital market and enriching the bond market products,but also of great significance to enriching the financing channels of companies.Besides,it also plays an important role in improving the asset portfolio structure of Commercial Banks.The development of medium-term notes objectively indicates that companies and investors have a wide range of needs for them.However,in the process of its development,problems are also appearing.In April 2015,Baoding Tianwei Group was unable to pay the interest of the "11 Tianwei MTN2",which was issued by Tianwei due to its huge losses.It is the first default event of the medium-term notes of the state-owned enterprise in the history of China.Since then,the frequency of default events of the medium-term notes in China has been increasing,and it shows an increasing trend.The default events of the medium-term notes indicates that the company cannot pay interest according to the coupon rate normally,which is largely due to the unreasonable pricing of medium-term notes issued by company.And the financing cost represented by the coupon rate of the medium-term notes is an important index to measure the risks and benefits of the medium-term notes.On the background of break of MTN,the study on the influencing factors of the financing cost of the medium-term notes can make reference not only for investors but also for issuers of the medium-term notes.This paper analyzes the factors which influence the financing cost of medium-term notes from two aspects:non-financial factors and financial factors.In terms of non-financial factors,we choose factors from different aspects such as-the macro environment,the corporate itself,the bond factors and other factors as research variables.Based on the analysis of the transmission path of how various non-financial factors affect the medium-term bill financing cost,we select 5177 medium-term notes issued from 2008 to 2018 as a sample for regression analysis,and add the special clause,the types of interest rate and the difference of different rating agencies as new variables innovatively.In terms of financial factors,we choose some financial indicators(debt paying ability which could be presented by asset-liability ratio,the growth ability which could presented by the net profit growth rate)as explanatory variables based on the financial statement.Finally,we explore the influence of financial factors on medium-term financing cost through the linear regression model.According to the research,in terms of non-financial factors of the macroeconomic factors,the economic prosperity index,M2 and CSI 500 index is negatively correlated with the financing cost of medium-term notes,while CPI and medium and long-term loan interest rate are positively correlated with the financing cost of medium-term notes.In the terms of the company factors,state-owned enterprises and listed enterprises have lower financing costs when issuing medium-term notes,but enterprises in cyclical industries have higher financing costs.Among the factors at the bond level,the issuance scale,issuance period and credit rating are negatively correlated with the financing cost of medium-term notes.In addition,the rating difference of different rating agencies arid different interest rate types are also correlated with the financing cost of medium-term notes.Among other factors,default events and special terms are positively correlated with the financing cost of medium-term notes,while the turnover rate which represent the liquidity of medium-term notes is negatively correlated with it.In terms of financial factors,the better the business is,the lower the coupon rate will be when the medium-term notes are issued.Therefore,on the basis of the conclusion,this paper puts forward suggestions from the perspective of promoting the development of the economic,the management of relevant regulation departments and the enterprise itself.