The Appropriateness Analysis Of Local Government Bonds Issuance Scale

This thesis first discussed the current conditions of local governmentbonds in China, followed by the demand scale and credit risk analysis.Based on the above research, this thesis forecasted the disposable incomeof local government through regression model, estimated the defaultprobabilities of local government bonds using KMV model, and came tothe following conclusions: the local government bonds issuance scales of2009,2010, and2011on the whole had not reached the optimal scales,and larger scales could be accepted; in general, the default probabilities ofbonds with maturity in2012,2013, and2014would be small, and creditrisk would be within control. Then, this thesis analyzed the creditconditions of local government bonds by regions, and studied the effectsof different solvency of different regions on general scale appropriatenessof local government bonds. The findings showed that: first, the creditrisks of local government bonds of different regions were different, whichmeant that the local governments with stronger solvency could haveissued more bonds while the local governments with weaker solvencymight face default risks; second, there were372billion local government bonds under default risk, which covered62%of the total scale. Accordingto the conclusions of the appropriateness analysis of local governmentbonds issuance scale, this thesis made some suggestions on the long termdevelopment of local government bonds.