Corporate Bond Issuance Credit Spread Under The Impact Of New Asset Management Regulations

Since formed in 1980’s,China bond market has developed gradually and become the global 2nd bond market now.As a major feature of China bond market,rigid payment has existed for a long time and has a far-reaching impact upon domestic bond market.As investors are fully exposed to default risk,the credit risk of bonds can not be truly reflected,and market can not practise its self-adjustment ability.After the first substantial default event in 2014,although bond default has a certain upward trend,compared with the bond stock,the actual default rate is less than 6(?).Rigid payment expectation is still widespread"Guidance on standardizing the asset management business of financial institutions",or "the new asset management regulation",was officially released on Apr 27th,2018.It clearly stated "to break rigid payment" practise.After that,debt market was facing heavily liquidity pressure and debt default outbreak frequently.Based on this background,this paper was going find out the impact of the this new asset management regulations on the corporate bond issuance pricing.This paper selects 2012-2020 public offering corporate bond issued by listed companies as research samples,and use 2014-2020 default records in credit bond market as credit risk data source,to test how credit spread changed after the new asset management regulation.The empirical test shows:the issuing credit spread of corporate bond has been expanded after the new asset management regulation,and it’s significantly related with market default intensity.However this relationship didn’t exist before the new regulation,which shows that the new regulation has some influence on market risk expectation and investors behavior.Besides,the empirical test also shows credit rating and state ownership are also significantly related to the credit spread.Meanwhile the bond differentiation has been enhanced:lower rated,non stated-owned company is facing heavier pressure when default event occur frequently in bond market.This research result could be a reference material to study influence of the new asset management regulation,and also help investors and borrowers making decisions.