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Comparison of government bonds and corporate bonds

Author: ChenChunXia From: www.yourpaper.net Posted: 2009-04-01 23:57:20 Read:
First, government bonds and corporate bonds issued by comparison
From the issue of credit basis. The issuer of government bonds by the central government, with the national credit, National Credit the highest credit rating of all the credit in the form of credit risk minimum, the national debt is often known as "gilts", issued without collateral. Corporate bonds of issuers enterprises with corporate credit, in the assessment of corporate credit, pay attention to the visit from the "6C" quality, capacity, capital, operating environment, business continuity and status of collateral, as the business development, "6C" with a certain degree of uncertainty to affect corporate credit, corporate bonds with credit risk, the need to provide security issue. April 8, 1998, the People's Bank of China released the "corporate bond issuance and transfer of management approach, which provides enterprise should provide guarantee for issuance of bonds, but the approval of the People's Bank of China exempted from guaranty. The end of 1999, corporate bond issuance approval authority transferred to the National Development and Reform Commission, the People's Bank of China, the National Development and Reform Commission is basically a continuation of the practice in the security arrangements.
From the issuance varieties. The national debt since 1981, resumed the issue Treasury bills, of key construction bonds, financial bonds, national construction bonds, special bonds, increasing the bonds and convertible bonds. According to different classification criteria, these bonds can be classified as follows: period can be divided into short-term government bonds, medium-term government bonds and long-term government bonds; negotiability can be divided into negotiable government bonds, non-negotiable government bonds; divided into fixed-rate interest rate decision Treasury bonds and floating rate debt; Interest payment can be divided into zero coupon bonds and interest-bearing government bonds. In recent years, the national debt the most Bearer book-entry uncertificated, to two years and three years, a smaller proportion of long-term government bonds and short-term government bonds. 1-year book-entry treasury bonds, savings bonds launched, further enriching the treasury bonds. Our corporate bonds issued by local corporate bonds varieties, focusing on corporate bonds, interest-bearing corporate bonds, certificates of deposit with the clear corporate bonds, products quota corporate bonds, corporate short-term financing bills. These corporate bonds, depending on the classification criteria, can be classified as: bearer corporate bonds and bearer corporate bonds; period can be divided into short-term, medium-term and long-term corporate bonds, short-term period of one year, according to whether the bearer can be divided into following corporate short-term financing bonds, medium-term is about three to five years of corporate bonds, medium-and long-term corporate bonds for more than five years; coupon rate can be divided into a fixed-rate corporate bonds and floating-rate corporate bonds; determined by the bond repayment way once maturity corporate bonds, graded corporate bonds to maturity; whether by bonds convertible into other financial instruments can be divided into convertible bonds and non-convertible corporate bonds. In 2005, corporate bond products to be innovative, launched a floating-rate debt, with the option bonds, bottom and floating debt, new bond products for a period of 20 years to 30 years, bonds and short-term financing bills.
Issue size. The implementation of the annual quota management system on the scale of the issuance of treasury bonds, China, on next year's bond issuance program in the fourth quarter of the previous year, the preparation of the bond issuance program is based on the estimates of income and expenditure of the state budget. Bond issuance program is one of the budget report, to be submitted to the State Council, submitted by the State Council to the National People's Congress validation. Through validation, the scale of the issuance of treasury bonds in the year of relative stability. Corporate bonds issued by the scale of China's approval system. "Corporate bonds, issued in 1993, the provisions of the Ordinance, the Planning Commission (now NDRC) drawn up in conjunction with the People's Bank and other departments nationwide corporate bond annual scale, after the approval of the State Council, the lower reach of the local government and relevant departments perform; divided central corporate bonds and Local corporate bonds, by the same level Planning Commission in conjunction with the People's Bank responsible for the issuance of the approval. Corporate Bond Management Ordinance amendments have been included in the key items of legislation of the State Council in 2006, before the introduction of the revised Corporate Bond Management Ordinance, and still follow the old "Bill". Since Chinese enterprises from the early 1980s, the issue of corporate bonds, bonds issued by enterprises has gone through several stages: the bud stage (1982 - 1986), issued a similar corporate bonds marketable securities amounted to 100 billion; rapid development stage (1987 -1992), the enterprises to issue bonds to raise 55.228 billion yuan; the rectification phase (1993-1996), enterprises issuing bonds 667 billion; recovery stage of development (since 1997), as of 2004, the enterprise The size of the issuance of bonds reached 178.989 billion yuan. Especially corporate bonds issued in 2005, 37 and a circulation of 65.4 billion yuan; 84 issue of short-term financing bonds, amounted to 145.3 billion yuan. Although the bonds issued by enterprises continues to expand, but the scale of relative national debt, there is still a large gap (see Table 1).

From the issue of interest rate pricing. Pricing basis of the level of interest rates on financial instruments in the financial markets in developed countries bond yields, the trend of bond yields is closely linked to market interest rates, market interest rates can be as a weathervane to reflect the capital supply and demand situation in the market, the Treasury yield curve is often as new debt important pricing benchmark. Corporate bond pricing Zeyi bond yields as a benchmark, consider the risk premium on the basis of (credit risk premium and liquidity premium). In China, the issuance of treasury bonds interest rates are not determined by the market, Although the current national debt, there are four distribution methods, namely direct issue, consignment issue underwritten issue, auction tender issued. Bidding auction, the issuance of treasury bonds interest rate is determined by the bidders bid, but not government bonds issued mainly in the form bidding auction issue, underwritten National Debt. In the next issue of the non-bidding auction, the issuance of treasury bonds interest rates in the same period in the same grade of the savings deposit rate basis, plus some basis points to determine on this basis. The issuance of treasury bonds so determined interest rates are generally higher than the savings deposit rate of the same grade in the same period, bond yields and risk not match, did not reflect the quality characteristics of government bonds as gilts, the Treasury bill rate as the benchmark interest rate function is not implemented, resulting in the entire financial lack of market recognition in the market, the benchmark interest rate, the objective is also to the pricing of corporate bonds brings difficulties. Corporate bond pricing without reference to bond yields, the same bank deposit rates, administrative methods to take non-market pricing provisions of the corporate bonds coupon rate is not higher than 40% of the interest rates of bank time deposits over the same period (see Table 2). In order to determine the price difference is very small, and does not reflect the issuance of corporate credit status, there are significant deficiencies in the system.
, Government bonds and corporate bonds in circulation compare
Bank for International Settlements will be the definition of market liquidity: market participants to quickly carry out a large number of financial transactions, capital asset prices and will not lead to significant fluctuations. Usually a measure of liquidity indicators are: the bid-ask spread; volume; turnover ratio (turnover) (tube holy righteousness, 2005). Currently, the National Debt circulation market consists of three parts: the national inter-bank bond market, the stock exchange market and the bond-counter market. The bond market is in a split situation, that the bonds between the various markets can not free-flowing, investors can not be in the market between the free flow of market liquidity inherent weaknesses of the government bonds circulation, market segmentation lead. Use of indicators to measure the liquidity analysis, the bid-ask spread of government bonds continued to be maintained at 50 - 200 basis points, the same indicators in developed countries is about 5 basis points or so, the larger the difference, the market liquidity is weak; on turnover in terms of As of December 31, 2005, the the National Debt circulation market, listed in the Shanghai Stock Exchange, the Shenzhen Stock Exchange and the inter-bank bond market trading of government bonds 162, 2005 total turnover of 1.304073 trillion yuan treasury bonds, the total bond market turnover 21.08%; turnover, from 2000 to 2005, the National Debt turnover fluctuated in the range of 0.3-1.6, the national debt liquidity is not high (see Table 3). More lagging behind the development of the market of corporate bonds in circulation, and the end of 2005, the flow of the market, there are 112 corporate bonds, corporate bonds trading in 2005, the total turnover of 33.125 billion yuan, accounting for only 0.54% of the total bond market, only the total national debt volume 2.54%; 2000 to 2005, corporate bond turnover than low turnover rate of the same period in government bonds, only to fluctuate within a range of 0.2-1.1 of more than government bonds, corporate bond liquidity is poor (see Table 3).
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