The Impact Of Local Government Debt Replacement And Issuing Refinancing Bonds On New Urban Investment Bonds

Since a nationwide audit of local government debt was launched in 2013,the regulatory level has introduced a number of measures to try to reduce local debt risks.The central government started a three-year local government bond swap program in 2015.From 2019,it allowed the issuance of government refinancing bonds to ease the debt repayment pressure of local governments.At the same time,it also introduced a series of policies to different regions for risk reduction guidance.But so far there is still a large stock of debt to be repaid,many city investment bonds have signs of default.A small number of urban investment enterprises issued bond extension announcement,regional debt risk in some area is still high.This paper focuses on the debt problem of the Beijing-Tianjin-Hebei region,and uses the data of urban investment bonds from 2015 to 2022 and the relevant data of local government bond replacement to make an empirical analysis,exploring the effect of bond replacement on new urban investment bonds.This paper establishes the individual and time two-way fixed effect model,uses the official data to calculate the replacement ratio of local bonds,and tests the effect of the replacement ratio on the spread and the new scale of new urban investment bonds issuance.The results in this paper show that the increase of replacement ratio can significantly reduce the issuance spread of local urban investment bonds in the next year(" implicit guarantee effect ")and curb new issuance(the "substitution effect").Moreover,compared with the replacement plan during 2015-2018,the issuance of local government refinancing bonds has a more significant effect on reducing the spread of new urban investment bonds.Opening the front door through substitution effects can block the back door to some extent,but it could also make markets more sensitive to implicit guarantees,putting governments in a quandary.Therefore,the government should be careful to use replacement means,especially government refinancing bonds,when solving local debt problems in the future.Instead,we should enhance the utilization efficiency of funds and reduce the pressure of regional debt by giving full play to the scale effect and regional advantage complementarity,so as to provide a good fund supply channel for economic construction while controlling the scale of debt.