Study On The Theory Of Enterprise Bond Finance And It's Development In China

This article studied on enterprise bond financing theory and development of bond market. The author had given comparison experiences and lessons of bond management in partial advanced counties and developing market for enterprise bond, and had given systematical analysis and summarization to current status of enterprise bond financing in China as well as problems existed. Based on foundation of enterprise bond development in China and the facing environment, quantitative and qualitative analysis & prediction were given to idle funds, gross social fund and enterprise direct financing, especially enterprise bond financing. We had applied ideas and theory of development economics to study the policy system and strategic concept required, thus to sort out a way to accommodate enterprise bond development in China with socialistic market economy.I. Basic conclusion1. Enterprise bond financing theoretic frame has rich content. The theoretic model of enterprise bond development includes contents such as enterprise optimization mode, market optimization mode, property rules optimization mode, management optimization mode, etc.2. In order to guide Accelerate enterprise bond system in a market way, China should learn bond management experience from overseas. Developed countries and partial new markets have accumulated rich experience in company bond management, presented by enhancing market cultivation, increasing flowability of bonds, paying attention to formation of bond investors and setup strict information disclosing system and emphasize on continuous optimization of market system thus to avoid bond risk.3. Problems existed in enterprise bond financing of China have relatively influence to economy and society. The problems in enterprise bond management in China including: Strong political interference in management system, virtualization of enterprise bond financing operation; the financing scale is not in balance with market demand; low flowability and low efficiency; improper agent operation, etc. These issues had deep influence to state investment management system reforming, government administrative function conversion, forming of investor teams and development of financial capital market. It has direct influence to enterprise credit, relationship between government and enterprises, adjustment of enterprise financing structure and investors themselves.4. Economic growth will enable high speed development of enterprise bond in China during the first 20 years of this century. The enterprise direct financing is estimated to have a rapid development from now on to year 2020, among which the proportion of financing by enterprise bond will be a rising tendency in general, it is estimated that the direct financing amount by enterprises will be risen from RMB 161 billion in year 2000, and RMB 320 billion in year 2010 and RMB 850 billion in year 2020; The proportion of enterprise bond financing is increasing yearly among enterprise direct financing and the proportion of enterprise direct financing is also increasing yearly among enterprise financing.5. We have to pay attention to rules construction for standardizing enterprise bond financing market. First is laws and stipulations, including relevant laws, dedicated management codes and policy measures; Second is supervision system, including transaction, auditing & rating system, as well as public media supervision responsibility and enterprise self-discipline activities; Third is rating system, including credit evaluation system, compulsive rating system under control from creditors, information disclosure system from rating organization and scoring method for credit rating, etc. Fourth is risk prevention system.6. The vital content for bond market developing healthily is to form comprehensive effect of policy. These contents include four aspects. First is to develop enterprise entities with core competitiveness, drawing up new management system, unifying bond management content, optimizing bond rate market system. Second is to develop agent system, and strengthen their supervision function. Third is to create enterprise bond financing market platform thus to enable enterprises with bond issuance conditions entering bond market, also reduce bond listing procedure and develop over-the-counter transaction. The last one is to strengthen state's supervision to bond financing and quickly forms system integrated with state or social supervision and enterprises self-discipline.II. Substantial ideas1. The value of financing by enterprise bond is not merely financing, but expressing in following three aspects. Firstly to realize assets expansion value with bond financing, which expressed as maintain rapid flow of borrowed capital and try selecting low cost borrowed capital. Secondly to realize value of financial lever, which expressed as expanding scale of enterprise production factors and change the relationship between enterprise liabilities and assets. Thirdly to realize value of meliorating capital structure, which expressed as forming capital structure to maximal business value by analyzing liabilities and rights.2. The origin of problems lies in 5 aspects in enterprise bond financing of China, which include that the basic origin is the system of planned economy, administrative interference exists in whole process of bond management, social market system is unsoundness, enterprise management is backward and bond operation system is nonstandard,3. The first 20 years of the 21st century is the rapid developing period for enterprise bond financing in China, it is estimated that the financing amount by enterprise bone will be approximate RMB 150 billion in year 2010 and RMB 450 billion in year 2020, its share in direct financing by enterprises is maintained around 50%.4. Avoiding enterprise bond risk is an vital and hard question in bond management practice in China, the concept of bond risk prevention system includes accelerating basic credit system construction, classification management to bonds, developing and standardizing bond rating organization, pushing forward enterprise bond cashing reserve system.5. Basic systems for enterprise bond financing shall be set up in China, including 4 systems, which are laws, supervision, rating and risk prevention.III. Innovation1. Systematically to expound theoretical frame for enterprise bond financing of China. This article had given general content of theoretical frame system for bond financing, practice of enterprise bond financing, principle of confirming enterprise bond factors, enterprise bond financing value analysis and theoretic mode of enterprise bond development.2. To give overall analysis and evaluation to current status and problems existed in enterprise bond financing. The great contribution of enterprise bond to enterprise financing was fully considered during this system-restructuring period. The remained problems was classified and analyzed during progress of enterprise bond, thorough analysis were given to origins of problems existed in bond financing.3. Overall systematical to predict relative indexes of enterprise bond financing. Development of enterprise bond financing is decided by both restriction from economic environmental conditions and basis of currency fund supplement. This article had given quantitative analysis to scale and structure of social financing start from idle fund, based upon prediction to enterprise direct financing, quantitative prediction were made for over next 20 years.4. To put forward enterprise bond cashing reserve policy. The author had first brought forward the idea of establish enterprise bond cashing reserve system in China, it has given theoretic and abstract description to principle of this system, and had given the case of Chongqing Iifan Group enterprise bond for analysis.5. To discuss the policy and strategic of enterprise bond financing. This article had involved basic system for enterprise bond financing, this system is composed by 4 parts of respectively law, supervision, rating and risk prevention; Also it has suggested 4 strategic conceives of bond quality, bond structure, market expansion and whole process supervision.IV. Suggestion to policy1. To draw up new bond management system the new bond management system shall represent the general orientation of market, and embodies periodical features of marketeconomic system. First, we need to realize that the bond is the source of capital, its configuration shall be decided by market; second, the intensity of administrative interference and approval control shall be gradually weakened in bond management system.2. To draw up measures matched with system. First is bond application and assessment work. Content of application material and application procedures shall be defined, the assessment duration of assessment authorities shall be restricted; Classify standard and requirement to nation-wide and local bond issuance, thus to define the main content of bond issuance assessment by enterprise supervision & administration authorities. Second is credit rating, it is required that the credit assessment shall be a complete scientific procedures, method and system. Third is bond guarantee, the supervision & administration authorities shall carry out strict review to the validity, standard and feasibility of guarantee measures, guarantee not finalized, invalid or non-standard will not be granted. Fourth is bond issuance consignment, the bond issuance must be consigned to professional organization. Fifth is the participation of accounting firm and law office. Sixth is bond information disclosure, including information disclosure before bond issuance, bond continuity period and temporary report disclosure when big accidents occur, etc.3. To unify content of enterprise bond management. The definition of enterprise bond is "Securities issued as per legal procedure by enterprises, agreed to be repaid capital with interest within certain period of time". Unify management content of enterprise bond in aspect of laws, give it the unique name of enterprise bond, will help unify management to enterprise bond.4. Gradually To set up and optimize enterprise bond interest market system. The principle embodied by market system of enterprise bond interest is high risk with high return and low risk with low return. The bond interest reflects part of the commodity price, and the interest level reflects the invest value of enterprise bond; it is an important basis for purchase decision made by investors. The market system of bond interest in China has the foundation of investors, other conditions for enterprise bond interest market system will be gradually created based upon trial operation.5. To develop social agent for enterprise financing. The system of qualification of assessment organization must be decided by ability of assessment organization; the assessment result shall be connected with bond issuance interest. Maintain independence of accountant and lawyers in agent work. While consigned organization is undertaking the bond consignment business, it must do entrust from bond supervision & administration authorities to give tracing to operation of raised fund in project, construction progress, operation and financial status of project, thus to effectively fulfill its supervision & monitoring function to bond issuer. Strict requirement shall be given to service of agent, and civil restitution system shall be initiated. For results from behavior of remiss in duty, practice fraud and defection, this agent shall be held responsible for property restitution liability to property liquidation...