Research On The Influence Of Government Implicit Guarantee On The Credit Risk Of Urban Investment Bonds

Urban investment bonds are credit bonds that use the urban investment platform as the issuing body to raise funds for infrastructure construction and public utility construction.Under the background that it is difficult for local governments in China to issue government bonds,urban investment bonds,as one of the important sources of financing for infrastructure construction by local governments,have developed rapidly.Urban investment bond is a bond financing method with Chinese characteristics.It originated from the reform of tax distribution system,and is the product of credit creation in the history of China’s land finance reform.It has the dual characteristics of corporate bonds and municipal bonds.The issuance of urban investment bonds,on the one hand,helps to alleviate the financial difficulties of local governments,promote the reform of the financial system,and on the other hand,plays an irreplaceable role in the improvement of the bond market.However,in the face of the current relatively loose monetary policy and regulatory environment,the demand for local governments to raise funds through financing platforms has increased significantly.Based on the research of relevant domestic and foreign literature,this thesis studies the relationship between the implicit government guarantee and the credit spread of urban investment bonds.Credit spread is an effective indicator to measure credit risk.The main factors affecting credit spread include liquidity,tax,expected default probability and other systemic risks;For investors,since the existence of guarantee can significantly reduce the probability of default of the debtor,it can effectively reduce the investment risk,and thus affect the bond credit spread.In terms of empirical research,this thesis takes the provincial urban investment bonds occurred in China from 2015 to 2021 as the research object,obtains relevant data from WIND database,Guotai’an database and the official website of the National Bureau of Statistics,takes the credit spread as the explanatory variable,and takes the explicit guarantee of local government,implicit guarantee of local government,and the willingness of local government to guarantee as the explanatory variables,and carries out empirical research through the panel data regression modelThe calculation results of the empirical study mainly support two conclusions.First,the level of explicit guarantee of local government has a positive correlation with the credit spread.The credit spread of urban investment bonds with explicit guarantee provided by local government is higher;Second,the level of implicit guarantee of local government has a negative correlation with the credit spread.The stronger the implicit guarantee ability of local government and the stronger the implicit guarantee willingness of local government,the lower the credit spread of urban investment bonds.Based on the research results of this thesis,this thesis puts forward four policy recommendations.The first is to strengthen the stock screening,replacement management and survival management of local government urban investment bonds;Second,expand the sources of local government construction funds and financing channels,and further realize the unification of administrative and financial powers;The third is to further improve the credit enhancement methods of urban investment bonds;Fourth,promote the market-oriented transformation of urban investment companies,improve the voluntary profit contribution of urban investment companies,and do a good job in risk resolution of existing urban investment bonds.