Research on Corporate Bond Risk Premium and Default Based on Voluntary Dual Ratings Selection

This study examines the key influencing factors of voluntary dual ratings selection in corporate bond financing and the effect of dual ratings on risk premium and default risk, based on corporate bond data issued from 2016 to 2021. It shows that the worse the bond issuers’ credit qualifications, the more likely they are to seek dual ratings before issuance. Compared to a single credit rating, the risk premium for a bond with dual ratings is lower, and the effect becomes more significant in the low-rated and non-listed company samples. There are dual ratings before bond issuance, and the higher the average credit rating level of the bond, the lower the bond’s default risk. The research findings provide a theoretical basis and empirical evidence for the practice of voluntary dual ratings in China, expand research on the influencing mechanism of bond issuance pricing in the context of voluntary dual ratings selection, and examine the information content of credit ratings from the perspective of their ability to predict bond default.