Impacts Of Government Implicit Guarantees On The Issue Pricing Of Urban Bonds

First of all,the problem of the debt of the local government of China is outstanding,and it has received extensive attention from all sectors of society at home and abroad,and has caused heated discussions.As a financing platform established by the government,the city investment company has become an important part of local government debt.Accordingly,urban investment bonds have become more and more important as an important part of local government debt.In addition,considering the bond market in China,the price of urban investment bonds is usually lower than that of general corporate bonds.Especially in short-term bonds,the price of urban investment bonds with higher risk premium is lower than the price of corporate bonds.We have to start thinking about whether government information affects bond prices when pricing urban investment bonds with local government backgrounds.Further,how to combine the unique characteristics of government implicit guarantees in the Chinese bond market and take it into account in bond pricing.Moreover,there are large differences in the economic levels of different regions.The fiscal revenues of local governments and governments at different levels are also different.The urban investment bonds in individual regions may have certain liquidity difficulties in the process of repayment,and the probability of default events.bigger.Therefore,there may be regional differences in the role of government implicit guarantees in bond pricing.The study of these issues is of great significance for actively and steadily resolving the current implicit debts of the Chinese government,further eliminating debt risks,and improving the market pricing mechanism of urban investment bonds in the future.This paper is mainly based on the data of urban investment bonds released from 2006 to 2016,and uses STATA measurement software to conduct empirical research on the relationship between urban investment bonds and local governments and government implicit guarantees for the pricing of urban investment bonds.The results show that: First,the impact of government implicit guarantees determined by local government financial resources on the pricing of urban investment bonds is divided into two aspects: guarantee ability and guarantee willingness,which together have an impact on their issue spread.Secondly,the macroeconomic environment,the characteristics of the bonds themselves,the size of the issuer's assets,and the operating conditions will all have a significant impact on the pricing of urban investment bonds.However,the impact of the profitability of the city investment company is not significant,reflecting the city investment company.In fact,it is the status quo of the government's "financing tools." Finally,for the urban investment bonds issued in the eastern and central and western regions,there is a significant difference in the impact of the government's implicit guarantees on its issuance spreads.According to the research results,we propose to gradually promote the development of financing platform companies in the direction of marketization,divest the local financing function of urban investment companies,further improve the credit rating system of urban investment bonds,and strengthen risk management.