Empirical Analysis On The Factors Affecting Credit Spread Of SME Private Bond

Stock market and bond market are important direct financing ways of corporate all the time. However, compared with indirect financing tools such as bank loan, market scale of direct financing tools especially bond in China is still small.As one of key part of Chinese economy, most of SMEs(Small and Medium Enterprises) fail to meet the qualification of issuing bond and face the serious difficulty of financing. On May 22nd,2012, "Pilot Methods of SME Private Bond" was published. SME private bond began to issue from then on, and affecting factors of credit spread in the process of the issuing and pricing of SME private bond has become one of the hot topic. This paper breaks through from this new kind of bond and hopes to find the key factors which affecting the fluctuation of credit spread from the study.Firstly, this paper introduces the background and significance of launching SME private bond, then makes a horizontal comparison between SME private bond and global high-yield bonds. Afterwards, based on the theoretical and practical studies of home and abroad scholars about the affecting factors of credit spread, this paper summaries 10 factors from macro and micro aspects, using theoretical study method to analyze the reason why these factors caused influence. In the practical study part, this paper analysis the relativity between each two factors, and uses factor analysis method to combine these factors. For validating the expected theory and acquiring the final result,7 most typical factors are selected to do the modeling by the method of multiple linear regressions. In the end, this paper provides some suggestions about the future development of SME private bond in China.