Empirical Study Of Medium-Term Notes’Offering Price In China

Compared to the developed countries, China’s medium-term notes (MTN) market started late, which was officially unveiled in April2008, but developed rapidly. Until the end of2014, the issuance of medium-term notes has far exceeded corporate bonds. With short-term financing bonds and corporate bonds, MTN has become one of the top three members in our corporate debt financing market. As to the issuing system, Our MTN market mainly refers to the experience in US, which uses the registration system and takes the bookkeeping and bookbuilding mode. Under the current issue system, analyzing the factors that influence the MTN’s pricing model is useful to both optimizing MTN’s pricing model, and also helping investors to evaluate investment value. Thus we can make relevant policy recommendations for the development of MTN market.With the combination of qualitative and quantitative analysis, the theoretical analysis and empirical research, this paper manages to analyze the factors that affect the MTN’s pricing model.Firstly, we defined the basic concepts and the basic characteristic of MTN. MTN is essentially debenture and it is issued by non-financial companies in the inter-bank bond market. The MTN takes bookkeeping system, which the interest rate is determined by the bid of underwriting syndicates. So this paper mainly focuses on the MTN’s primary market.Secondly, in order to find the factors that affect MTN’s pricing model qualitatively, we reviewed the academic research related to credit spreads and MTN pricing model. Also by absorbing the merits of the existing literature and analyzing the theoretical basis of credit risk pricing model, we determined the theoretical basis of this study, which could provide a theoretical reference for subsequent empirical research.Thirdly, based on the conclusions of the literature and theoretical study, we theoretically summarized the possible factors that influence MTN’s pricing, which was supplemented by a preliminary empirical research.Finally, we established an empirical model based on the above theoretical research. The empirical results show that some macroeconomic indexes, the credit rating of MTN, the individual financial indicators of issuers had a significant influence on the MTN’s pricing.