The Influencing Factors Of The Issuance Price On Local Government Bonds In China

Issuing local government bonds is not only a measure for the central government to regulate the local government borrowing and financing system,but also a very important measure to prevent and resolve financial risks.The research on the debt problem of local government has been put on the agenda,in which the pricing of local government bond issuance has become the most important issue of local government bond issuance.The issuance of local government bonds has a profound impact on the borrowing and financing system,the prevention and resolution of debt risks and the implementation of local fiscal policies.Local government bonds have entered the normal issuing stage since 2015.Local government bonds have become the only way of debt financing for local governments in China.With the continuous expansion of the issuance,the local government bond market has developed to a new stage.Its issuance pricing will have an extensive impact on all participants in the bond market.Under the premise of market-oriented issuance,its pricing is directly affected by the market interest rate and the credit of the local government.Since then,revolutionary changes took place in the pricing mechanism of local government bonds.With the continuous investment of local government bonds and the continuous improvement of the bond market,the degree of marketization is getting higher and the credit risk premium is becoming more and more prominent.Compared with the long development history of municipal bonds in developed countries,China’s local government bonds started late,and the issuing system and mode are not perfect.How to price local government bonds and what are the factors that affect the spread of local government bonds have become the key issues.The object of this paper is all the local government bonds publicly issued by banks and exchanges in 34 provinces of China from 2015 to 2018.This paper models the pricing of local government bonds from three angles.They are the characteristics of bonds,the financial situation of the government and the level of macro-economy.First,make an empirical study on the whole country,and then study the eastern,central,western and northeast regions respectively.Descriptive statistical analysis,multiple linear regression and stepwise regression are used to analyze the influencing factors of local government bond pricing.Through the empirical study,the following conclusions are drawn.The issuance period and the degree of land financial dependence have a positive impact on issuance spreads in all regions of the country.The size of the issue not only has no significant impact on the issuance spreads in the eastern region,but also has a negative impact on other regions.Government fund income local financial self-sufficiency rate and general public budget revenue have a negative relationship with the issuance spreads in the whole country and the eastern region.The per capita fiscal revenue is only negatively related to the issuance spreads in the western region.Except that the industrial structure has no significant impact on the spread of local government bond issuance in the central region,it has a negative impact on other regions.The level of economic development has a significant positive impact on the spread of issuance interest rates between the central region and the western region.The year-on-year growth rate of CPI has a positive correlation with the issuance spreads in the western and northeast regions.Due to the existence of regional economic heterogeneity,different explanatory variables have different effects on issuance spreads in different regions.Finally,it puts forward a series of countermeasures and measures according to the future prospect of local government bonds.At present,China should appropriately expand the issuing scale of local government bonds and enrich the maturity varieties of local government bonds.Reduce the degree of dependence on land finance,optimize the local industrial structure,improve the supervision and management functions,and strengthen the risk control of local government bonds.