Research On The Influence Of Government Implicit Guarantee Ability On Credit Spread Of Urban Investment Bonds

Urban investment bonds are a type of bond with Chinese characteristics issued by urban investment platforms,and the main purpose of issuance is to promote local infrastructure construction and improve the level of urbanization development.Since Shanghai issued its first urban investment bond in 1994,the auxiliary function of urban investment bonds to the financial capacity of local governments has appeared,which can not only make up for the lack of fiscal revenue and expenditure,but also help promote local economic development.Since urban investment bonds are inextricably linked with local governments,which greatly reduces market investors’ concerns about risks,we call this behavior of pursuing and convincing the safety of urban investment bonds"urban investment belief".At the same time as the explosive growth of the urban investment bond market,the complexity of the financial structure of local governments has increased,the stability of economic development has been limited,and the accumulation of hidden debts of local governments has posed a serious threat to the stability of China’s economic market.Since 2014,relevant departments have issued a series of regulatory measures to resolutely curb the indirect financing of local governments by urban investment platforms through special channels,completely strip off the vicious relationship between local governments and urban investment platforms,promote the compliance transformation of urban investment bond platforms,and achieve a safer and more stable development of the urban investment bond market.Based on summarizing the research of domestic and foreign scholars,this paper considers the degree of influence on the credit spread of urban investment bonds from the perspective of local governments,macroeconomics,financing platforms and bonds themselves,focuses on analyzing the mechanism of the government’s implicit guarantee ability on the credit spread of urban investment bonds,and conducts empirical tests based on theoretical analysis.This paper selects the urban investment bonds issued from 2015 to 2021 as experimental data,calculates the credit spread of urban investment bonds according to the yield of government bonds of the same maturity on the issuance date,and analyzes the significance and correlation of each index on the credit spread of urban investment bonds.The empirical results show that the government’s implicit guarantee ability can significantly reduce the credit spread of urban investment bonds,and macroeconomic factors,urban investment platform factors and the bond’s own factors have different degrees of influence on the credit spread of urban investment bonds.Compared with the northwest region,the implicit guarantee ability of local governments in the eastern region has a more significant effect on the credit spread of urban investment bonds.Compared with long-term bonds,short-and medium-term bonds can more clearly detect the existence of implicit government guarantees.After introducing economic policy uncertainty into the model as a moderating variable,it is found that it has a positive effect on the mechanism.Based on the above conclusions,relevant policy recommendations are put forward from three perspectives.In short,local governments must strictly implement the relevant policies issued by the state,erase the hidden connection with the urban investment platform,completely eliminate the expectations of market investors for the implicit guarantee behind the urban investment bond,and let the pricing mechanism of the urban investment bond operate around its true value,which is of great significance to prevent local hidden debt risks.