The Impact Of The "The Three Red Lines" Policy On The Bond Spreads Of Real Estate Enterprises

Since the implementation of deleveraging regulation and control in China,the financing environment of the real estate industry has been tightened continuously.In order to promote the establishment of a long-term mechanism for healthy and sustainable development of real estate enterprises,a new regulation on capital management of "The three red lines" and four blocks management was proposed in 2020,all-round supervision of real estate financing,and promote the real estate to reduce the leverage ratio.As the second largest financing channel of the real estate enterprises,the bond market has the characteristics of high flexibility and low financing cost,which makes the real estate enterprises with limited financing pay more attention to the issue of bonds,and the issue spreads become the focus of attention.There is a great endogeneity between the leverage ratio and the bond issue spreads,and it has been difficult to establish the research model of the two,this paper studies the impact of "deleveraging" on the bond issue spreads by using the Differences-in-Differences model.To certain extent,it alleviates the endogenous problem between the leverage ratio and the bond issue spreads.This paper takes the data of real estate listed companies issuing bonds from2018 to 2021 as the research sample,and adopt empirical research methods from difference aspects:the number of touching lines,touchlines index and types of bonds,so as to comprehensively analysis the impact on bond spreads.The results show that "deleveraging" is conducive to reducing the bond spreads of real estate enterprises,and the three index will robust reduce the bond spreads of enterprises respectively.The degree of impact from high to low is Cash to short debt ratio,Asset-liability ratio excluding prepaid accounts,and Net debt ratio.Because real estate is the representative of capital-intensive enterprises,the particularity of capital demand makes it pay more attention to the capital structure.Reduce the leverage ratio conducive to reducing the bond issue spreads,and support the related research of leverage ratio and bond issue spreads.The results of this study also confirm that the implementation of "The three red lines" policy has a positive effect on the bond market,confirming the effectiveness of the policy deleveraging.The spread of medium-term notes is more affected by policies than the corporate bonds spread.The main reason is that investors in the interbank market have higher professional risk identification ability,make the best of indicators,and speed of information transmission to the bond spreads faster.Corporate property and credit rating still have a significant impact on bond spreads after the implementation of the policy.Finally,combined with results of this research,this paper put forward feasible suggestions for the financing and future development of real estate enterprises.