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New opportunity to probe into the corporate bond market development

Author: HuangZuoHua From: www.yourpaper.net Posted: 2009-04-21 15:46:14 Read:
papers Keywords: capital markets, corporate bond market corporate finance investment tools

after the split share reform is completed, China's capital market is a great development. The corporate bond market is also facing a new development environment, the China Securities Regulatory Commission officially released in 2007 the implementation of corporate bond issuance pilot approach. Based on the new situation of economic development, and to explore the need for the development of the corporate bond market, feasibility, and puts forward recommendations for the development of the corporate bond market.

In recent years, the global financial situation has become increasingly complex and volatile, have occurred in the financial crisis, the maturity of the bond market, not only is the safe haven of the financial crisis, more economic stability. China's stock market since the completion of the split share structure reform, institutional change, has been a great development, the development of the bond market, especially the corporate bond market, however, is still lagging behind. To this end, this paper investigates the development of a new opportunity in the current favorable environment for the development of the corporate bond market.

a need for the development of the corporate bond market

(A) the international bond market, especially the corporate bond market from the financial crisis, the "spare tire" significance.
Southeast Asian financial crisis broke out in 1997, the reason for many, but these Southeast Asian countries, without exception, are the lack of an effective capital market financing relies heavily on the banking system, short-term financing (often foreign currency financing) the excessive duration and currency kind DOUBLE mismatch. Sudden reversal when the massive inflows of capital, will result in a currency and banking crisis. Crisis, asset prices collapsed, a developed corporate bond market can be a sharp weakening in the banks capital base by seriously hamper their ability to lend, can serve as an important channel for corporate finance and timely follow-up to address the urgent needs of the corporate sector , in order to alleviate the impact of the economic crisis. Obviously Southeast Asian countries due to the lack of damping mechanism provided by the bond market, the bond market can provide investors with a buffer area of ??the transfer of funds.
Therefore, as Gordon Stein noted that emerging countries prevent and resolve one of the measures of currency mismatch risk is that priority should be given to the development of domestic bond markets, to encourage the development of available risk hedging hedging tool. Extend the diversification of the financial system to avoid the problems of the financial sector to the entire economy. From a practical point of view, the aftermath of the crisis, Southeast Asian countries to remedy the situation, the rapid development of the bond market, especially the corporate bond market. For example, South Korea, Malaysia's debt balance is the proportion of GDP rose to 38.2% in 2001 from 29.5% in 1997, 16.53% and 31.74%. The development of the corporate bond market in China is relatively backward.
The United States in the early 1980s and the late 1980s, early 1990s, have occurred twice banking crisis, a result of the Latin American debt crisis of the sky, and another from the commercial real estate crisis. In these two crises, the U.S. banking sector suffered heavy losses, its capital base by weakening sharply and seriously hamper its lending capacity, the U.S. bond market in varying degrees, to play an alternative banking system for corporate finance play an important role. This is the bond market, the role of the banking system and the spare tire.
(B) in the country, the development of the corporate bond market is to optimize the structure of the capital market, to broaden the company's funding avenues, to avoid excessive concentration of risk in the banking system, and the favorable measures to provide investors with more investment tools.
At present, China's capital market has begun to take shape, but a series of problems, such as a single capital market structure exposed the lack of lack of investment products and risk management tools, far can not meet investors growing demand for different investment products , can not meet the financing needs of the enterprise.
A long time, a high proportion of corporate finance in bank loans, the banking system took on massive debt risk. Short-term bank funding sources and use of funds long-term trend of asset-liability maturity mismatch problem is serious. Due to the presence of the expected appreciation of the renminbi, the currency mismatch in the structure of assets and liabilities also gradually becoming apparent. Double duration and currency mismatch makes the banking system is facing greater interest rate risk, exchange rate risk and liquidity risk, and is not conducive to the stability of the financial system of the country as a whole. The issuance of corporate bonds risk spreading to many investors who, and can better identify and quantify the risk of changes in the secondary market, the corporate bond market than bank loans dispersed more risk.
At present, China is awash in liquidity, and investors' lack of investment channels, In addition to the low-yielding savings deposits, only high-risk stock market and real estate market, with no transition zone, vulnerable to external shocks. After the split share reform is completed, China's stock market from bear to cattle, a large amount of capital flowing into the stock market, it turns out, the irrational actions lead to the ups and downs of the stock market, a well-developed corporate bond market is able to act as a better transfer of funds haven and the role of buffer zones.
The development of the corporate bond market, the formation of structural optimization of capital markets, and encourage enterprises in the face of greater investment and financing constraints, more rational selection risk minimization, the lowest cost of financing channels; investors in the face of such a market can be more rational investment and excavations of the capital value.

Second, the feasibility of the development of the corporate bond market

From the market prospects, compared to the international capital markets, the corporate bond market in China has great development space, in order to speed up the development of the capital market reforms, the country has begun to vigorously develop the corporate bond market, at this stage the development of the corporate bond market is facing a good opportunity for .
(A) macroeconomic sustained high growth rates and high savings rates, a favorable economic environment for the development of the corporate bond market to create
20 years of rapid growth of the Chinese economy has attracted worldwide attention. Although there have been large fluctuations in the economy, but the economy has maintained steady growth in recent years. The level of savings continues to improve, the economy has maintained rapid growth. From the long-term trends, China's financial markets will remain a loose money environment, which will promote the development of corporate bond market. First: sustained high growth of the Chinese economy has laid the basis for maintaining high savings, provide adequate sources of funding for the bond market; Second: the acceleration of the trend of population aging, precautionary savings will increase, so as to form a stable bond market in long-term needs;: demand constraints, capacity over the medium-and long-term challenges facing the Chinese economy, the funds transfer from the commodity markets will shift to debt products, including financial investment; Fourth: With the assessment of the capital adequacy ratio of commercial banks gradually stricter, the use of bank funds will shift to bonds can save capital investment, and thus the formation of relatively strong demand for bonds.
(B) the corporate bond market facing micro-finance environment has certainly improved
Micro-financial environment of the corporate bond market has gradually improved. First, the main body of investment continues to mature. Regulatory philosophy and system innovation. The inter-bank bond market, for example, in recent years the reason why this market products, trading methods, tools and other innovative, one important reason is that the concept of regulation and changes in the way; investor protection regime is gradually improving, the Securities Investor Protection funds, and insurance guarantee fund has been set up, the deposit insurance system is also under way; gradually improve the social credit system, credit system for faster progress in recent years. At the same time, the credit rating and other intermediary services are gradually specification and development, these are as accurate disclosure and assessment of the risk of corporate bonds has created favorable conditions; Fifth, with the development of the financial product innovation around the corporate bond credit enhancement as well as other The innovation of the risk management tools will also continue to develop. Corporate bonds as a credit risk, in addition to properly reveal risk through information disclosure and rating, but also with a variety of financial products and tools to manage their risk. For example, the creation of various types of asset-backed or guaranteed corporate bonds, credit derivatives (CDO, CDS, etc.), risk management of corporate bonds can provide an effective means.
(C) the development of the corporate bond market policy efforts have enhanced
Since the completion of the split share structure reform, the stock market institutional change has been a great development, and the development of the bond market is slow, and in stark contrast to the stock market, and China to build a multi-level capital market, optimize capital market The structure envisaged is contrary. Therefore, the central economic work conference, to raise the proportion of direct financing, pointed out that the development and growth of the capital market, the need for special attention to the development of the corporate bond market. The department in charge of the good economic development environment, the timely introduction of measures to encourage and support the development of the corporate bond market. July 14, 2007, the China Securities Regulatory Commission officially launched the implementation of corporate bond issuance pilot approach provides a sound legal basis for the rapid and healthy development of the corporate bond market, institutional factors in the development of some of the shackles of the corporate bond market in the past resolved has a great role in promoting its development.
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