The Impact Of China's Credit Rating On Corporate Bond Spread

In recent years,the rapid development of China's financial industry,the growing demand for direct financing by enterprises,and bonds,especially credit bonds,have played a pivotal role in the capital market as the company's main direct financing tools and instruments.On January 15,2015,the China Securities Regulatory Commission issued the Administrative Measures for the Issuance and Transaction of Corporate Bonds.The introduction of this regulation has greatly accelerated the development of the corporate bond market in China.The history of China's credit rating industry has been more than 20 years since its rise.This development has achieved certain achievements,but at the same time there are also some problems.As an important player in the bond issuance market,credit rating agencies shoulder the task of providing objective and real credit information on bond issuers so that bond investors can more accurately grasp the risk and return status and provide investors with a reference for decision-making.In this context,the research on the impact of China's credit rating on the spread of corporate bond is becoming more and more important.This article reviews relevant domestic and foreign literature and conducts research on the development history of credit ratings,credit risk,and the factors that influence credit spreads.At the same time,this paper studies the status quo of China's credit rating industry and bond industry,clarifying the concepts and methods of credit rating,summarizing and analyzing relevant regulatory documents related to credit rating,and pointing out the problems existing in credit rating.Next,this article describes the development status of China's bond industry,the proportion of different bond varieties in the bond market,and highlights the development potential of corporate bonds.At the same time,the number of breaches in the bond market in China has continued to increase in recent years,and the situation of bond defaults has been sorted out.At present,due to the short development time of corporate bonds in China,there are still relatively few empirical studies on this area.The text combines the research method of He Ping and Jin Meng(2010)and uses the latest data for empirical analysis.The article selected 608 fixed-rate corporate bonds issued from January 1,2012 to December 31,2017,and screened 459 valid bonds through the use of multiple data filters.In the empirical analysis,the main factors affecting the rating are considered,and the credit rating,bond issuer financial information,and bond characteristics are included in the model.Two econometric models are used,one is the multiple linear regression model,and the other is a two-stage econometric model.In the first stage model,the credit information of the bond issuer is regressed with the credit rating to obtain the fitting residual error.Represents additional information after removing the publisher's published financial indicator information.In the second stage model,regression analysis was performed using the fitted residual ? an explanatory variable.Through the above research,this paper draws the following conclusion:China's credit rating has a significant impact on the spread of corporate bond issuance.The bond's own characteristics have a significant impact on corporate bond spreads.Financial indicators have limited impact on corporate bond credit spreads.Different credit rating agencies have significant differences in the factors that affect the issuance spread of corporate bonds.There are certain differences among institutions,and there may be some phenomenon of rating purchases.Finally,based on the problems existing in China's credit rating industry,it put forward targeted policy recommendations on supervision.