Study On Credit Risk Assessment Of City Investment Bond In China Based On A Ordinal Logistic Regression Model

In China’s massive urbanization process, local governments face enormous pressure under fiscal decentralization and the restrictions of China "budget law", this gave birth to the rise of the local government investment and financing platform. City Investment Company to vote through the issuance of city bonds on behalf of the local government financing, funds for social welfare programs and the construction of urban infrastructure. And local governments allocate its operations by giving them the operating rights of state-owned assets and state-owned land using rights support. After the introduction of China’s expansionary economic policy in2008, led to a spurt of development trend of city Investment, and the credit risk of the city investment bonds has aroused widespread interest. It has become essential to evaluate the credit risk of the city investment bonds scientifically and effectively.The issuers of city investment bonds are not the same as an ordinary business. Ordinary business is to maximize profit as the goal, using its own assets to operate. City investment bonds debt service funds in addition to part from the project proceeds, more reliance on local financial support. Therefore, when evaluating the credit risk of the city investment bonds, should pay more attention to regional economic development level, the financial strength of local government and local government support and guarantees increase trust and the impact of measures. Ordinal Logistic Regression Model assume lesser, and has some ability to predict. Factor analysis can maximize the manifestation of the index information, effectively reduce the variable dimensions. Therefore, in considering the accuracy and the availability of the data, and consistent statistical coverage, select59city investment bonds issued in2010-2011to analysis.ate of74.58%, and increase trust measures, high size of the regional economic development, high overall financial scale, low debt burden, can improve the credit level of the city investment bonds; the indicators of main business profitability and financial ability to grow as reflected in the financial statements shows no significant impact on the credit rating of city investment bonds. The results showed that the overall model fit higher, and prediction accuracy terms of overall, based on Ordinal Logistic Regression Model city investment bonds defaults measurement model for simple model and higher predict rate, can be used for the estimates of city investment bonds defaults with a certain degree of practicality.