  This paper examines the effect of the political network of Chinese municipal
leaders on the pricing of municipal corporate bonds. Using municipal leaders'
working experience to measure the political network, we find that this network
reduces the bond issuance yield spreads by improving the credit ratings of the
issuer, the local government financing vehicle. The relationship between
political networks and issuance yield spreads is strengthened in areas where
financial markets and legal systems are less developed.
