Research On The Credit Constraint Mechanism Of Special Local Government Bonds

Bond defaults in recent years gradually increased, making the regulatory authorities to pay more attention to the debt problems of the bond market. To make special local government bond market long-term healthy development, the key step is to establish the credit restraint mechanism, improving the special bond to credit risk management system.The State Council issued "the State Council on the Strengthening of Local Government Debt Management Advice". The Ministry of Finance released the Ministry of Finance on the issuance of the "Special Local Government Bonds Issued Interim Measures for the Administration of the" notice. These documents introduced on local government debt have a revolutionary classification arrangement: local government bonds in accordance with the use of funds and repayment of funds is divided into general bonds and special bonds. The former refers to the local government to ease the shortage of funds or solve the temporary shortage of funds and bonds. The latter refers to the issuance of raising money for the construction of a concrete project. To repay general debt, local governments usually use fiscal revenue as collateral, and to repay the special bonds, local governments tend to use the completion of the project revenue as a guarantee. This division has strategic significance and profound principle measures.With the expansion of special local government bond issuance, management and risk prevention of special local government bonds is becoming more and more important. How to establish a special bonds of local government debt constraint mechanism is one of the most important aspects of the management system and risk prevention. This article, through analysis of the local government debt management and studying foreign relevant market experience, puts forward suggestions for establishing and perfecting China’s local government special bond credit restraint mechanism, namely: establishing funds for issuance of project selection and its constraint mechanism, building a scientific and standardized manner project selection, specification special bond debt and money management, evaluation for bond fund to use; Reasonable design and improving the mechanism of credit rating, special bond rating reference indexes, specification selection, a rating agency; Perfecting the information disclosure mechanism of local government bonds, to standardise the content of information disclosure, establish a unified information disclosure platform, standardize the format of the disclosure of information; Bond insurance and credit mechanism, timely introduction of bond insurance mechanism, credit arrangement; Making the issue of special debt repayment mechanism, improve quota management, constructing the repayment guarantee mechanism.This paper is divided into five chapters. The specific contents are as follows:The first chapter is the literature review on the foreign debt constraint system. Such as the United States and Japan local government bond market, especially American as the first issue municipal bonds of country, in order to prevent and control the debt risk of local government, the United States has gradually formed the laws and regulations as the basis, information disclosure as the core, to control the scale, credit rating, risk early warning, crisis resolution as a means of risk monitoring system at the government level for the effective prevention of municipal bond system risk. Through strict information disclosure, credit rating, and fully risk supervision, local government debt risk can achieve full isolation from center government, effectively preventing local government debt risk.The second chapter is the meaning of credit constraint system discussed on the local government special bonds. The meaning of local government bond credit constraint mechanism of special maintenance is discussed according to lowering the cost of local government bond issuance, the prevention of financial and fiscal risks and reform of investment and financing requirements of these three aspects.The third chapter is the emergence of special local government bond creditconstraint mechanism of the problems and risks. Special local government bonds are running on the background of the Chinese local government bond market. The bond market has decentralized management system, low efficiency, lack of transparency in the financial information, dependent rating. Credibility is not high for special bond credit constraints specific operating system. Capital supervision system needs to be further developed. Information disclosure of issuers and credit rating should be on debt issuance of project information disclosure.The fourth chapter is the international experience of local government bond credit special constraint system and reference. Learning from the experience of countries in the development of local government bonds, it is necessary to clarify the public finance system, strengthen supervision of a multiple parties, strengthen information disclosure and credit rating market discipline and regulation.The fifth chapter is the establishment constraint mechanism of China local government special bond funds and policy recommendations. To establish a set of special bonds project selection mechanism, it should be focused on capital budget management, post project evaluation, clear supervision main body of the scope of responsibility, improving the local government bonds information disclosure mechanism, specification of unified information disclosure content, the establishment of unified information disclosure level, regulate information disclosure format, a sound credit rating mechanism, rich government increase trust system construction, construction of local debt repayment guarantee mechanism.