Abstract
Breaking the rigid repayment of municipal investment bonds (MIBs) is essentially releasing the implicit guarantee of local governments. We analyze the effects of implicit government guarantees on MIBs’ credit spreads and find that regional economic strength, local government's financial strength, and fiscal balance have significant effects on the credit spreads of MIBs; the effects of implicit government guarantee on the credit spreads of MIBs depend on the regional economic development status; the effects of implicit government guarantee on the credit spreads are significant across different MIBs issued by public welfare institutions, quasi-public welfare institutions, and comprehensive municipal investment companies.
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