An Empirical Analysis Of Factors That Affect Credit Spreads Of China’s Manufacturing Corporate Bonds

In china,bonds is popular with investors.They always believe that bonds’ yields is stable and is not easy to default.As a matter of fact,the bond market in our country before 2014 had never appeared default problem.Until March 4, 2014, "chaori 11" event of default, only to break the rigid redemption of the bond market in China.Since the incident, more and more default events occur in our country.According to incomplete statistics, as of october 2015, more than 20 debt default and credit incidents has happened in our country. By observing the default target, this paper found that the default debt is mostly corporate bonds that is issued by the manufacturing company.This paper find that the number is up to more than ten,Such as "12 dongfei 01", "12 lanbo 01" and "10 zhonggang".Therefore some scholars pointed out that the concentrated outbreak of debt default events reflects the risk of industry which is represented by manufacturing industry with excess capacity.This actually is also consistent with the scale of manufacturing corporate bonds in our country, this article calculate out that the number of manufacturing corporate bonds in China accounted for more than 45% of total amount(by the end of 2014).And In order to promote the development of manufacturing industry in china, the government has put forward the "made in China 2025" plan.Considering the above situation, this paper want to study the influence factors of manufacturing corporate bond credit spreads which reflects the risk of debt default.Through the study of factors that affect credit spreads of china’s manufacturing corporate bonds, this paper hope to find out these important factors that affect the debt risk of default and the risk premium.This paper adopt theoretical analysis method and empirical analysis methods to analyze the research content of this paper. In the empirical part, this paper is from two different angles of industry and company to carry on the detailed analysis.First of all, in this paper, theoretical part introduces the developmental status of manufacturing corporate bonds,the change features of manufacturing corporate bonds credit spreads and the influence factors of manufacturing corporate bonds credit spreads in china.Secondly, in the empirical part, this paper will respectively set up empirical model of industry and individual company factors.From the point of industry, this paper establish multivariate regression model to analysis industry overall factors how to influence the average credit spreads of manufacturing industry.At the same time, this paper will compare it with other industries.Hope Through this comparison,this paper hope to find out some prominent factors that affect manufacturing corporate bonds credit spreads.From the point of company, this paper use the stepwise regression method to establish multivariate regression model.In this model,this paper want to analysis these individual factors of manufacturing companies how to influence credit spreads of single manufacturing corporate bonds.Moreover,in this paper, bonds will be divided into three sub sample on the basis of its credit rating.Through comparison, this paper want to find out that these individual factors will show what kind of differences under the different levels of credit rating.Through the analysis of the theory part and the empirical part, the following results were obtained in this paper.Firstly, the circulation of china’s manufacturing corporate bonds and its proportion in recent years have appeared a downward trend;Secondly, the credit spreads of China’s manufacturing corporate bond experienced less volatility before 2013.After that time it experienced a greater volatility.Thirdly,through the empirical analysis of industry overall influencing factors, this paper find that the growth rate of GDP, PPI and broad money supply(M2) have a great effect on the average credit spreads of China’s manufacturing corporate bond. In comparison with other industry, this paper found that the industry overall influencing factors have a bigger effect on the average credit spreads of China’s manufacturing corporate bond than any other industry;Fourthly,through the empirical analysis of individual factors, this paper found that issuance subject rating affected significantly and the other factors were not significant.In addition, by comparing different sub sample,this paper get an interesting conclusion:If the bond credit rating is high, individual factors will have a strong influence on the credit spreads of manufacturing corporate bonds.