The Research on the Risks of Municipal Bonds in Our Country
|Keywords||Municipal Bonds debt from local governments system reformation riskprevention|
Ever since the outbreak of financial crisis of2009, the central government, forthe first time, approved the issuance of200billion Municipal Bonds in order tostimulate the economic recovery. Then, on October,2011, the state council authorizedfour regions of Shanghai、Zhejiang、Guangdong and Shenzhen to pilot the issuance ofMB voluntarily within the scale of central provisions. The gate opening and the pilotof the MB mean that the local governments in China are on the way ofmarket-oriented financing. The significance of MB is not just to satisfy the financingneed of local governments, but also to help China with clearing the huge implicit debtfrom local governments. However, the administrative and economic systems in Chinaare far from mature, and the size of the debt is extremely huge, which all make thenew-born MB face all sorts of challenges and risks. We cannot be to too careful withthese problems.Therefore, the goal of this paper is to explore the underlying risks for MB andmention that the credit risk is the major and fundamental one. Basing on somerelevant MB risk theories and the status quo of MB in our country, this paper analyzesthe categories of MB in China. Particularly, the KMV model is used and places ofShanghai, Hunan and Qingdao are set to be the examples to prove and analyze thecredit risk for MB. The rest risks include system risk, the increasing development gapbetween areas and moral hazard. As to tackle the problems mentioned above, I thinkthat the MB issuance and supervision experiences of America and Japan whichrepresenting two countries with total different political systems can give us a lot ofenlightenment that deserves our learning and reflection. In the end, dependent of thesuccessful experiences of foreign countries and our actual situation, this paper putforward advices of system reformation and risk prevention according to each risk thatmentioned above.