Effects Of Local Government's Financial Status On The Credit Spread Of Local Corporate Bonds

In recent years,corporate bonds have ushered in rapid development.The number of issued companies and the scale of financing have risen year after year.It has become an important force in the bond market and has gradually become an important choice for companies to undertake debt financing.At the same time,China's current local government debt problems are outstanding.Many provinces have severe local government financial conditions.Local governments' annual fiscal revenue is far lower than fiscal expenditure.Based on the above social issues,this paper attempts to empirically investigate the intrinsic link between the spread of corporate bond issuance and the local government's financial status,and verifies whether the government's implicit guarantee exists.This paper uses the corporate bonds listed in the Shanghai and Shenzhen stock markets from 2010 to 2016 as an analysis sample to empirically study the impact of local government financial conditions on the credit spreads of local corporate corporate bonds.After research and issuance,per-capita fiscal revenue is significantly negatively correlated with local company corporate bond issuance spreads,and the ratio of per-capita fiscal deficit and per-capita fiscal deficit to per capita fiscal revenue is positively correlated with local corporate corporate bond issuance spreads.This shows that the government's implicit guarantee is real and that the government's fiscal position can significantly affect the issuance spread of local corporate bonds.On the other hand,the paper divides the sample bonds into two parts: the sample of state-owned enterprises and the sample of non-state-owned enterprises,and conducts empirical research again.We find that the effect of local government finances on the issuance spread of corporate bonds is even more pronounced in the sample of state-owned enterprises.Local governments have a stronger role in the implicit guarantee of local state-owned enterprises.In addition,through the method of group comparison,this paper finds that the higher the level of local government administration of the debt-issuing enterprise,the lower the credit spread of corporate-issued corporate bonds is,and the lower the government's administrative level will be compared with the credit spread of corporate bonds.Negative correlation.Finally,based on the problems found in the research,this paper proposes related policy recommendations and research perspectives.The policy recommendations include increasing government support for high-quality private enterprises,realizing the shift from the budgetary management system to the accrual accounting system,implicit management of hidden guarantees,establishing a scientific risk sharing system,and improving the financing channels of local governments.The research prospects include further studies on the formation of credit spreads from the perspective of behavioral finance,further studies on the impact of bond defaults on credit spreads,and in-depth studies on changes in credit spreads in the later period of urban investment bonds.