The Research On Appropriate Issue Size Of Local Government Bonds In China

The international financial crisis have taken severe impact on the domestic economy in 2008, the central government launched the 4 trillion economic stimulus plan. Starting in 2009, the central government issued 200 billion yuan local government bond, which is published by the central government but named for the local government, to help local government overcome the financing difficulty. The local government accumulated some experience on debt management though operation of these years. Early 2015 "Budget Law" has been modified, local governments have the right to issue bonds, the issue size was the explosive growth. Coupled with the existing debt burden, how to control the local government bond issuance has become a prominent and urgent issues. From a credit risk perspective, KMV model based on local government bond credit risk measurement, and give local government bond issuance appropriate scale on this basis. While empirical research, calculate appropriate Hebei local government bonds issue size for risk prevention. The main contents are as follows :Firstly, based on a review of local government bonds abroad related research, the concept defines, describes the basis of relevant theories, and credit risk and bond issuance relations were analyzed.Secondly, analyses the international scale management experience of local government bonds, compares the scale management system of municipal bond in various countries; introduces the development and trends of history of local government bonds issue, provides a real basis for controlling the size and risk prevention;Thirdly, uses the KMV model to measure the credit risk of local government bonds, forecasts revenue for future years through econometric model calculations, calculates indicators including volatility of local government revenue, local government revenue growth rate and local government debt due for repayment, calculates the bond issuance for risk prevention and does empirical analysis on Hebei Province, provides a reference to the local government for how to arrange the bond issue.Finally, according to the empirical conclusions, in order to reduce the risk of default this paper proposes countermeasures and suggestions form improving the legal system, strengthening the scale of approval, establishing the information disclosure system, developing the credit rating system and constructing risk early warning system to control the issue size of municipal bond issuance.