On 13 July 2021, Johnson Mo (NYU Shanghai, China, and NYU Stern, U.S.) presented at the TAF Research Seminar the paper titled “Boosted Credit Ratings in China: The Effects of Credit Enhancement on Bond Pricing“. This paper is joint work with Haoyu Gao (Renmin University of China) and Yuting Huang (Capital University of Economics and Business Christina).
The paper studies the impact of credit enhancement and improved issuance ratings on credit spreads and finds a robust impact on reduced spreads. The results can be explained by a risk reduction and loss sharing mechanism. Thus, the paper suggests that credit enhancement usage provides a market solution for low-rated firms to issue high-rated bonds and lower the cost of debt financing.
Johnson Mo received his education at the University of Cambridge, Imperial College London, and Stanford University, among others. He received his PhD from Stern School of Business, New York University. Currently, Johnson Mo is at NYU Shanghai. Mo’s research areas focus on the Chinese economy, and in particular on the Chinese bond markets.