Study On Credit Ratings Of City Investment Bond In Shandong Province

The city investment bond is also called the quasi municipal bond.The goal of its issuance is to build infrastructure or public welfare infrastructure.The main issuer is the local investment and financing platform.The categories of the issue include corporate bonds and medium-term bills.Starting from January 1,1994,China has carried out the reform of the tax seperation system.In the case which the central undertaking vesrsus local undertaking remained 3:7,the central government's financial power has risen from 27.5%to 52.5%.To cope withgreater inequality between undertaking and financial power,local governments needed to perform functions of providing public products through financing.However,according to the People's Republic of China budget law,local governments had no right to issue bond.Therefore,local governments could only issue bond through indirect ways,that is,financing through local government financing platforms.In 2008,in order to cope with the international financial crisis and expand domestic demand,the Chinese government launched the "four trillion" investment plan.Since then,the city investment bond has entered an outbreak.With the issuance of the State Council's office of the State Council on the issuance of local government bond risk contingency plans on November 14,2016,the State Council announced that the local government's bond crisis has reached a more than dangerous edge.As the top three coastal province in the national economy,Shandong needs more care in risk control.More importantly,after the issuance of[2014]43 by the State Council,the local financing platform need to be clear and the local government need to be stripped away.The local government will be unable to pay the debt for the platform,which undoubtedly increases the risk of city investment bond.Although there is no real breach of the city bond,there are also credit risk events such as Yue construction bonds and Yi city investment bonds.After the governments' incapability to pay for the platform,the city investmen bond risk exposure will be huge.The doal of analyzing the risks of city investment bonds is to make Shandong's economy develop more steadily and not to go all in to pursue development speed,which will lead to the outbreak of risk.Based on the above background,this article first made a preliminary judgement on the risk sources of the city investment investment in Shandong Province,and found that the risk factors of the city investment bond are closely related to the local economic development factors and the bond issuance factors.Therefore,this paper chooses the factors related to the local economy and the city investment bond issuers as the independent variable,and credit rating of the city investment bond as the dependent variable.The method applied in this paper isLogit regression.This paper aims to find out the main influencing factors of the credit risk of Shandong provincial capital investment,so as to look for measures to reduce the risk of urban investment,and provide the corresponding policy suggestions for its transformation.