Credit Rating of Bond Market in China：Take Generalized Financial Bonds as an Example

Credit rating agencies (CRAs) in China tend to provide ratings that are higher than what they are supposed to be, so institutional investors and banks do not expect those credit ratings to reveal the real credit quality of the respective rating targets. This paper tried to find out would generalized financial bonds having dual rating plays the important role in determining the bond credit or not with Ordered Logit model. Eight explanatory variables were used in the model: profitability, efficiency, financial leverage, TierI, liquidity, quality, coupon rate and maturity. The result showed that having dual rating would have higher bond rating and bond rating tend to be higher with higher ROE and lower cost income ratio. It also showed that coupon rate and maturity also play the important role in determining the bond credit.