Research On Optimizing The Yield Curve Of Local Government Bonds

As the most important direct financing tool for local governments,the issuance of local government bonds in the primary markets,the construction and improvement of the secondary markets are of great significance for boosting local economy and economic transformation.Government bonds yield curve is an important “baseline” for financial markets and a barometer of bond markets.The curve comprehensively reflects the issuance limits,pricing rules,risk management,information disclosure and debt payment of local government bonds.This paper analyzes the most important factors for constructing general bonds yield curve.This paper analyzes the current situation and existing problems of local government bonds curve in China,such as local government bonds issuance pricing,bond maturity varieties issuance plan,bond rating,bond liquidity,institutional investor diversity basic factors.Not only that,in terms of curve construction method,the paper gives the basic principle to construct the yield curve,and puts forward the key term selection,variety yield curve design,issued by the issuer rating,data,quotation,trading and settlement,such as data processing,curve establishment quality inspection micro aspects,such as perfect and optimized.At the same time,the yield curve of local government bonds is constructed through the empirical analysis of actual market data by using multiple spline method,and the specific valuation results of local government bonds are given,which are compared with the valuation results of mainstream institutions in the market.The empirical results show that the local government bonds yield curve is optimized,and the bond valuation result is close to reality,which has important practical significance.In terms of optimizing the yield curve of local government bonds,the paper proposes measures to improve the issuance mechanism of key term products in the primary market,introduce the local government bonds renewal mechanism,improve the local government bonds rating,improve the liquidity level of the secondary market,improve the supporting mechanism,strengthen the market specialization,and gradually transfer from pricing based on the bonds yield curve to taking the local government bonds yield curve as the pricing reference.