| Since 2017,China’s bond market has entered a period of shock adjustment,in which the frequency of credit bond defaults has increased,deeply influenced the steady development of bond market.Credit rating is one of the most important ways to ensure the healthy development of the bond market.It solves the problem of information asymmetry between issuer and investor by exposing the issuer’s operation,management and financial risks.However,there are some problems in China’s credit rating market,such as rating pricing,inefficiency of reputation mechanism,and the market share of rating agencies is fierce,the attention paid to rating technical strength is insufficient,so rating inflated is inevitable.That made the credit rating can not reflect the true risk of issuers accurately,so that investors can not know about the true investment risk to help them make decision.Besides,the frequency of credit bond defaults increase the investors’ suspect of credit rating.So,it is important to improve the related rating system construction.In 2013,China’s inter-bank bond market officially introduced a dual-rating system,and stipulated that certain bond-type financial products should employ two qualified credit rating agencies for continuous rating before issuing,and submit the rating report of two rating agencies to the financial regulatory authorities when applying for the issuance.Other mainstream products,such as medium-term notes,short-term financing bonds,corporate bonds,etc.,are not mandatory,and may voluntarily choose whether to adopt dual rating.Besides,the relevant regulatory authorities held a seminar on the dual-rating system of the exchange bond market in June 2017,which discussed the establishment of a regulatory framework for the dual-rating system in future.Due to the maturity of the foreign bond market,the dual-rating rating model was spontaneously formed in the early stage.Foreign scholars have studied a lot on the relationship between the dual rating system and bond issuance costs,and they found that dual-rating system made the reputation mechanism more effective,in which the rating quality had improved obviously,therefore the firms that applied two rating agencies have more accurate rating which reflect the true operating risk and then lower their issuing costs.Comparably,China’s dual-rating system was established in recent years,it is not common to use double rating for companies issuing bond,both the rating mechanisms and bond market of China are quite different from foreign countries as well.Therefore,the conclusions of the study may not be fully applicable to China.At present,the domestic research literature on credit ratings mainly focuses on financing constraints and investment behaviors.Few scholars study the bond issuance costs in combination with the dual rating system background.So,it deserves to ask what effect the bond issuance costs will have under the dual rating system? what effect will the split rating have on bond issuance costs? All above Need further research.This paper selects medium-term notes,corporate bonds,asset-backed securities issuing in inter-bank bond market and corporate bonds,asset-backed securities issuing in exchange bond markets from 2014 to June 2018 as the research samples,empirically testing the impact of the dual-rating system on bond issuance costs,and further analyzing the impact of split rating on bond issuance costs under the dual-rating system.The results of this paper show that in all rated companies,the companies that adopted dual-rating could enjoy lower bond issuance costs.The reason is that in the dual rating environment,the rating results issued by different rating agencies are mutually verified,which greatly increases the rating agencies reputation costs,then led to an improve in the rating quality,which will further alleviate the degree of information asymmetry,correspondingly reduce bond issuance costs.Further,this paper finds that in all companies with double ratings,if the rating is split,the bond issuance cost of the enterprise will be greater than the company that ratings are not split.Because the split phenomenon indicates that the rating agencies have different opinions on the default risk of bonds,which increases the information uncertainty,and then increases investment risk,result in the higher bond issuance cost,on the contrary,the none-split companies have lower credit risk,so they could issue bonds at a lower cost.The above empirical results also illustrate that the dual rating system can play a role in distinguishing the issuer’s credit risk.Finally,based on the research result,this paper proposes policy recommendations from the enterprise level,credit rating agency level,bond market level and regulatory level,including: debt issuing enterprises should strive to improve the degree of information disclosure,disclosure quality,and strengthen the independence and professionalism of credit rating agencies,accelerating the full implementation of the dual rating system in the bond market and optimizing the regulation in rating industry. |
