Research On Municipal Bonds Of Local Platform Companies From The Perspective Of Regional Heterogeneity

Urban Investment Platform company refers to an economic entity with independent legal personality set up by the local people’s government and relevant departments with financial subsidy investment,direct injection of land,equity and other assets,to undertake the financing function of some government-invested projects.Municipal bonds refer to the urban investment corporation as the main issuer,issuing bonds to raise funds for infrastructure development and construction and public welfare projects,etc.,which has made a significant contribution to local government financing and urbanization promotion in China.Credit spreads are the difference between bond yields and the risk-free rate,helping investors measure the credit risk of bonds.Research on the influencing factors of municipal bond credit spreads is helpful for market investors to better identify the overall credit qualification of urban investment platform companies and price the newly issued municipal bonds reasonably.The issuance data of municipal bonds from 2011 to 2020 are used for empirical research,and the economic and financial strength of local governments,the financial status of issuers,the characteristics of municipal bonds and macroeconomic indicators are put into the regression model,and the special situation that China’s national conditions vary greatly from region to region is considered.The regions are grouped according to the level of government general public budget revenue and the level of infrastructure investment scale,and the main research results are as follows :(1)the fact that the local government has implicit guarantee behind urban investment platform companies,and the stronger the government,the smaller the credit spread of municipal bonds.It is found that the influence of government strength on municipal bonds is weakest in areas with strong government strength but small infrastructure investment.(2)The issuer’s own financial status also has a significant impact on the credit spread of municipal bond issuance,among which the asset size has the greatest impact.In addition,market investors will require higher risk premium compensation because of the asset structure and profitability of high income and high expenditure areas,the asset structure and solvency of low income and low expenditure areas,the asset structure of high income and low expenditure areas,and the profitability of low income and high expenditure areas.Based on the above research results,precise policy suggestions are proposed from the three aspects of urban investment platform companies themselves,local governments and regulatory bodies,in order to play a positive role in the rationalization pricing mechanism of municipal bonds.