Research On The Influencing Factors Of Credit Spread Of Urban Investment Bonds

As a debt financing method of local government investment and financing platform,urban investment bond plays an important role in raising funds for urbanization construction and alleviating regional fund gap.Urban investment bonds(CIBs)are highly political and are known as China’s special quasi-municipal bond.Due to the close connection between local government investment and financing platforms and government departments,there is a widespread "belief in city investment" in the market,that is,the expectation that the government will provide an implicit guarantee to guarantee the debt of the bottom city.However,the rapid development of urban investment bonds has brought about the accumulation of systemic financial risks.In order to prevent debt crisis,The State Council issued No.43 document in 2014,which required stripping the government financing function of investment and financing platforms and separating the scope of powers and responsibilities of local governments and investment and financing platforms.Since then,Beijing has rolled out policies aimed at breaking investors’ expectations of an implicit government guarantee.Against the background of stricter regulatory policies in the past decade,further research is needed on such issues as how effective the implementation of policies and regulations is and whether the implicit government guarantee still has significant influence on the pricing of urban investment bonds.In this paper,new urban investment bonds from 2015 to 2021 that are no longer part of local government debt are selected as research samples,the implicit guarantee of local government is broken down into guarantee ability and guarantee willingness,the theoretical mechanism of their effects on credit spread is discussed,and the implementation effect of central government policies is further tested through empirical analysis.The empirical results show that:(1)Under the strict supervision policy,the implicit guarantee of local government still has a significant impact on the credit spread of new urban investment bonds,and the lower the broad-based debt ratio of local government,the higher the proportion of local government financial resources,regional economic conditions and government subsidies in the total revenue of enterprises,the more conducive to reducing the credit spread of urban investment bonds.It shows that due to the mutually beneficial relationship between local governments and investment and financing platforms,the regulation of local government financing behavior by regulatory policies has not achieved the expected effect.(2)For urban investment bonds of different administrative levels,credit ratings and issuing regions,the impact of implicit government guarantee is also different: the higher the proportion of government subsidies,the lower the credit spread of district-county platform urban investment bonds,and the higher the credit spread of prefecture-level platform urban investment bonds;The ratio of issuance amount of urban investment bonds has a significant negative effect on the credit spread of urban investment bonds in AA+ and above and in eastern China,while it has a significant positive effect on the credit spread of urban investment bonds in AA+ and below and in central and western China.The influence of local government financial resources and government subsidies on the credit spreads of urban investment bonds AA+ and above is no longer significant;The influence of regional economic development and government subsidy ratio on the credit spread of urban investment bonds in eastern China is no longer significant.The implicit government guarantee has a more profound impact on low-level,low-rating and low-qualification urban investment platforms,so the implementation of subsequent policies should focus on the differences between platforms and regions,so as to better guarantee the implementation of policies.The implicit government guarantee has a more profound impact on low-level,low-rating and low-qualification urban investment platforms,so the implementation of subsequent policies should focus on the differences between platforms and regions,so as to better guarantee the implementation of policies.In order to promote investment and financing platforms and local governments to truly separate government from enterprises,and further resolve the problem of implicit government guarantee,this paper puts forward the following suggestions: the government should strictly observe the bottom line of risk,constantly expand financing channels,vigorously improve the level of economic development and coordinate regional development;Investment and financing platforms should strengthen project management,learn from successful experience to actively resolve debt crisis and accelerate the transformation process of the platform;Finally,investors should pay more attention to the financial condition of the platform and make rational investment.