The Effect Of Local Government Implicit Guarantee On The Credit Spread Of Urban Construction Investment Bonds

Urban construction investment bonds follow the issuance requirements and procedures of general bond financing instruments,but the issuer is a local financing platform with a government background.There is a big difference from the introduction of municipal bonds directly through the local government in the West.This kind of bond issuance model in my country has obvious "characteristics".Because such bonds play an important role in the process of urbanization and infrastructure construction in China,and there are many connections between the government and many governments,many researchers at home and abroad vividly call them "Chinese quasimunicipal bonds".This paper mainly studies the implicit guarantee of local governments during the issuance of urban construction investment bonds.In 2017,the central government intensively issued a number of regulatory policy documents that focused on preventing and mitigating local debt risks,heralding the local government debt management entering a substantial tightening stage,ending the urban construction investment bond market in recent years.Therefore,the research on this topic will set January 1,2017 as a key time node,and consider the investment bonds of the old and new cities that are still in the continuation stage from this node to June 30,2019 as the research object.The implicit guarantee is set as a proxy variable.After setting the bond's own characteristics and financing platform and other variables,with the help of regression analysis,the effect of this guarantee model on bond credit spreads is analyzed,and the role of guarantees on credit spreads of different nature platforms is also discussed.Through the elaboration and analysis of the paper,it is realized that although the debt problem of local administrative departments is increasingly strict and the policies and decrees issued by the higher authorities are increasing,the implicit guarantee always exists.And to a large extent based on the willingness and ability of the two aspects of the credit spread of the relevant bonds.On the basis of keeping the changing factors of the issuer and the bond itself fixed,the financial condition of local administration,the stable economic development,the administrative level of the platform,and the holding factors are corresponding to the unsatisfactory bond credit spread.As far as the old city investment bonds are concerned before 2017,the impact of implicit guarantees on credit spreads has become greater.This means that such guarantees by local administrations have a greater effect on bond spreads.Since there is no regulation on whether it is a government debt in the issuance stage,and the internal mechanism and forming basis of implicit guarantee are still in existence,there is a very delicate relationship between the urban construction investment bonds and the local administrative departments,and there is consistency of interests between them on a certain level.With the local government as the backing,so the market investment personnel generally optimistic expectations,think that the relevant bonds in the case of default will get the administrative department to guarantee,fulfill the repayment responsibility,so as to actively invest to achieve their own investment income.In the past researches on credit spread in this field,scholars have paid more attention to the traditional issues,and few of them focused on the land finance of local administrative departments.Although some researchers based on the analysis of fiscal land dependence and other issues,and it caused the unreasonable debt,the government debt repayment pressure and other impacts.However,based on the level of implicit guarantee to study the results of these problems are few,ignoring the risk and urban construction investment bonds have the relationship.There is no doubt that the income of land assets is a crucial part of the financial system of local administrative departments.The problem of inflated housing prices caused by land finance is also related to the image and overall strength of the government.This subject will focus on the analysis of urban construction investment bonds and land finance,and the concept of implicit guarantee involved in the analysis.Exploring the changes of the external market under the situation of land dependence not only enables external investors to make more reasonable investment decisions on corresponding bonds,but also enables administrative departments and bond enterprises to fully grasp the possible risks after analyzing the changes in financing costs.For the transformation and upgrading and risk management work have reference significance and reference value.