China's Corporate Bond Issuance At Reasonable Prices

Whether the bond issue price is reasonable or not directly relates the smoothness of bond issue and the success of the enterprises which raise funds. It also affects the efficiency of bond pricing, as well as concerns the effectiveness convergence of primary market and secondary market of corporate bond and the overall efficiency of the bond market.In this dissertation, a research has been made on the pricing rationality of corporate bonds in China from the empirical point of view. Our paper firstly selects corporate bonds that are publicly issued from the inter-bank bond market and bond exchange market in recent years, then discussing the underpricing model referring to the underpricing methods of scholars abroad with combining with the curent situation of corporate bond market in our country. It also analyzes the underpricing of corporate bond market by comparing the yield of bond with the yield of bond index in terms of bond underpricing, and then we find that underpricing generally exists in China corporate bond market. The degree of underpricing in exchange market is much higher than that of inter-bank market, and the underpricing level of long-term bond is much higher than that of medium term bond. We use regression analysis to analyze the factors that affect underpricing in depth, finding that there is a positive correlation between underpricing and bond scale.As the underpricing also has some connections with bond term and interest rate, then pricing the bond by applying discounted cash flow method of institutional term interests. By comparing theoretical price with bond issue price, we find that there is a more serious bond underpricing. In order to reflect the principles of value, the author chooses the principal component factors that reflect the corporate value by means of principal component analysis. In compare with the theoretical price, the closing price can better reflect the intrinsic value of companies. This also shows that the market trading price is closer to bond value. According to the conclusion, the author finally makes some policy recommendations to Chinese corporate bond market.