Research On The Impact Of Credit Rating On The Issuance Pricing Of The Enterprise Bonds In China

With the continuous expansion of the financing scale of China’s bond market and the continuous improvement of the government supervision,the development of the credit rating industry providing third-party services is accelerating day by day.However,in reality,credit rating agencies also often suffer from objections.Some people believe that under the mode of the rating entrusted by the issuer,the credit rating agencies are prone to have the behavior of falsely distorting their ratings to meet the issuer.There are also some views that the credit rating provided by rating agencies can convey incremental information to investors based on professional technology,reputation mechanism and other factors.Against such backdrop,this paper researches the effect of the credit rating on the issuance pricing of the enterprise bonds,in order to provide the right direction for the market participants.According to the Theory of Information Asymmetry,the Signal Theory,the Theory of Transaction Cost and the Reputation Theory,this paper analyzes the mechanism of the credit rating on the issuance pricing of the enterprise bonds,and how the degree of information asymmetry and the reputation of rating agencies affect the relationship between them.Taking the medium-term notes,corporate bonds,etc.,from 2014 to 2021 as research samples,the conclusion is drawn after empirical analysis by using the panel data model.Through the research,this paper draws the following main conclusions:(1)Credit rating can significantly affect the issuance spread of the enterprise bonds,and there is a negative correlation between them;(2)Compared with the enterprises with low information asymmetry,the credit rating has a strong effect on the financing cost of the bonds issued by the enterprises with high information asymmetry;(3)Compared with the rating agencies who have low reputation,the credit rating provided by the rating agencies with high reputation has a stronger financing cost effect on the bonds issued by Chinese enterprises.The finding out of this paper can improve the investors’ understanding of the effect of the credit rating,guide the enterprises issuing the bonds to reduce financing costs by reducing information asymmetry and reasonably selecting rating agencies,and provide direction for the regulators to further improve the credit rating system.