Abstract: Based on local government bonds issued during 2015-2017, this paper studies the factors affecting the interest rate spreads of local government bonds. The results show that rising financial gap and debt scale of local governments will lead to the increase of interest rate spread. In addition, bond maturity and Shibor rate are positively correlated to the spread of local government bonds while the proportion of the secondary industry and financial environment degree are negatively correlated. The results of subsample regression show that different types of local government bonds have different influencing factors. Specifically, revenue bonds are more sensitive to the fiscal situation of local governments than general obligation bonds; publicly issued government bonds are more sensitive to market conditions and fiscal situations than directional replacement bonds. Accordingly, we recommend accelerating the reform of the government accounting system, improving financial marketization degree, attracting diversified investment entities, improving the price mechanism and establishing a scientific assessment and risk management system for local government bonds.

Key words: local government bonds, interest rate spread in issuance, influencing factors, special bonds, general revenue bonds