The Credit Risk Study On SME Private Debt

China promulgated the "the SME private debt business pilot approach" on May2012.which marked the Chinese version of "junk bonds" officially launching in our country. The private debt provide a new model to solve the problem of financing SMEs. However, due to the high-risk and low-flow characteristics of the SME private debt, many investors dare not to rush to get involved. Therefore, how to measure and prevent credit risk is the biggest problem in the development of the private debt. Domestic private debt problem mainly concentrate on qualitative analysis and make recommendations accordingly, rather than theoretical study of their credit risk measurement methods.Based on the domestic and foreign credit risk measurement models, we choose the PFM model derived from KMV model to engage in empirical research and analysis by comparing the various models on the applicability of the bond market. We make the appropriate adjustments to the PFM model by combining with the special nature of the private debt market. The foreign experience of development of high-yield bonds and credit risk control mechanism give the corresponding suggestions for our private issuance problems. Finally. we select the first private debt issuance enterprise in Wenzhou as representative empirical research and analyze the conclusions and research limitations.SME private debt has launched for a short time, which results in the lack of theoretical research and more difficult acquiring of unlisted enterprise data. We only study one private debt issuance enterprise, which may result in limitations and one-sidedness.Therefore we put forward ideas and give suggestions for future research directions.