Cause Analysis Of Citic Sengong Perpetual Debt Default

In 1981,our bond market resumed normal operations.Since then,we have experienced forty years of wind and rain turbulence.At present,the overall development situation is very stable and its status in the financial market is increasing.Throughout the development of the bond market,it is obvious that the size and number of varieties of bonds are growing steadily.Of course,we also need to look through its bright achievements to understand the risks behind it.The bond market has always expanded with the credit risk,and because there is a rigid payment principle in our bond market,some bond issuers are unable to pay off the problem,which leads to the bond market default tide.The emergence of this problem not only affects the development of the entire financial market,but also seriously threatens the interests of bond investors.Therefore,this paper takes bond default events as the entry point,studies and summarizes the causes of bond default,and finds out the ways to deal with bond default through the specific analysis of the causes,which is conducive to the effective use of bond market financing channels to ensure their capital needs.On the basis of the previous scholars’ research,this paper SELECTS Jilin FOREST Industry as the research object,which is the first one to carry ON the perpetual bond renewal in China.By discussing the bond problem of Jilin Forest Industry,this paper excavates the main reasons for the perpetual bond default,and provides reference for the research of Chinese bond market,so as to realize the goal of preventing the bond default risk.First,this paper introduces the related about sustainable debt financing,aims to analyze sustainable debt financing risk points,the second through the relevant theoretical analysis on sustainable debt defaults happening mechanism,that is,from a sustainable debt itself design,internal financial and external macro and non-financial analysis sustainable debt default the universality of reason,Then combined with the specific case of the company to analyze the process of perpetual bond default and the main reasons for default,and use the relevant model for credit risk assessment,finally put forward the importance of strengthening the perpetual bond default risk warning awareness,and for the company’s perpetual bond default problem put forward countermeasures and suggestions.The findings are as follows :(1)as a new financing tool,perpetual bond has two sides.When the enterprise runs well,its special deferral mechanism will greatly relieve the short-term financial pressure of the enterprise and bring more cash flow for the enterprise.When the business condition of the enterprise is not good,the mechanism of forced interest payment and interest jump will be triggered by itself.At this time,both the interest itself and the fruits will increase the burden of the enterprise,thus accelerating the enterprise default.(2)The default of perpetual bond mainly focuses on the design of perpetual bond itself,external macro influence,internal financial and non-financial factors,and the most fundamental factor is internal financial factors.(3)In terms of its own design,the unique deferred interest and interest jump mechanism of perpetual bonds on the one hand gives enterprises the opportunity to delay interest payment,on the other hand,it greatly aggravates the pressure of interest payment.(4)The early warning effect of internal financial factors of enterprises is mainly reflected in debt paying ability,capital structure,operating ability and profitability.(5)Among the non-financial factors,the problems of corporate executives and internal management structure will directly affect the corporate image,lead to the crisis of corporate trust,and then indirectly affect the survival of perpetual debt.(6)External macro policy factors mainly include national policies,industrial development trends,etc.,which will directly affect enterprises and the decision on sustainable debt.The possible innovation point of this paper is to explore the important influencing factors,clearly understand the dual attributes of perpetual bonds,focus on the micro causes of the default of perpetual bonds,and combined with the case company Jilin Forest Industry’s renewal background to deeply explore the existing problems in enterprise management.On this basis,it puts forward suggestions to strengthen the risk management consciousness of enterprises and pay attention to the risk inspection of enterprises issuing perpetual bonds.