Research On The Implied Guarantee Of Urban Investment Debt

Urban investment bonds were born under the background of China's urbanization construction and tax-sharing reform.As the issuer of urban investment bonds is a financing platform that is directly or indirectly held by the local government,the funds raised by urban investment bonds are mainly used for infrastructure construction.Urban investment bonds have been considered to be implicitly guaranteed by the government and have low credit risk.Since 2018,affected by the international trade situation and the downturn of the domestic economy,infrastructure construction has become an important way to stimulate domestic demand and stabilize economic growth in the long run.In this context,the issuance of urban investment bonds hit a record high,and at the same time,default events began to occur.Based on a review of the development process of urban investment bonds and a theoretical analysis of implicit guarantees,this article selects corporate bonds in urban investment bonds that are issued from January 1,2018 to December 31,2019 as a sample.Then divides it into four sub-samples according to the year of issue,with or without guarantee.Taking the credit spread of urban investment bonds as the explanatory variable,20 explanatory variables were selected from the four levels of macro,region,issuer,and debt,and a comparative analysis and a multivariate linear regression analysis under the stepping method were conducted.The existence and changes of implicit guarantees in the new environment of resolving implicit debts and urban investment bonds in the context of technical defaults.This article mainly draws the following conclusions:First,regional factors and issuer-level factors have a more significant impact on credit spreads than issuer financial factors,including regional general public budget revenues,regional debt balances,regional real estate development investment amounts,and financing platforms.The scale and provincial platforms have a greater impact on credit spreads,reflecting that the division of boundaries between the government and financing platforms has not eliminated implicit guarantees.Second,compared with unsecured urban investment bonds,secured urban investment bonds are issued by district-and county-level financing platforms at a higher rate.Credit spreads are more sensitive to regional fiscal revenue and local debt pressure,indicating that the issuer's qualifications are poor.Under the premise of having explicit guarantee clauses,there are also higher requirements for implicit guarantees.Because the ultimate reimbursement party for explicit guarantees is also the local government,the implicit guarantee effect of the local government is even more pronounced for secured city investment bonds.Third,the credit spread of urban investment bonds issued in 2019 is more significantly affected by explicit guarantee clauses,indicating that although implicit guarantees still exist in the issuance of urban investment bonds in 2019,they are slightly worse than the implicit guarantees of urban investment bonds issued in 2018.According to the conclusions drawn in this article,in the process of managing urban investment bonds,it is necessary to focus on urban investment bonds issued by financial platforms with poor financial strength and district and county-level financing platforms,and strengthen capital supervision and information disclosure between issuers and local governments,strictly guard against systemic defaults of urban investment bonds.