Risk Study On Debt-to-Equity Swap Of State-owned Enterprises

Influenced by the "three-phase superposition",China’s economy has shown a downward trend in recent years.In October 2016,the State Council issued the Guiding Opinions on Debt-to-Equity Conversion of Market-Oriented Banks(hereinafter referred to as the Guiding Opinions)which marked the formal launch of a new round of debt-to-equity swap in China.The biggest feature of this debt-to-equity swap is marketization and legalization.After the introduction of the policy,the five major banks have set up asset management wholly-owned subsidiaries specializing in debt-to-equity swap.Meanwhile,the number of local asset management companies has gradually increased.With the support of governments at all levels and the active participation of market participants,this debt-to-equity swap has made a good start.From the contracted projects,the debt-to-equity swap enterprises are concentrated in the steel,coal,machinery and non-ferrous metal industries.Most of the large state-owned enterprises in these industries have serious overcapacity problems.And the goal of this round of market-oriented debt-to-equity swap is to reduce the capacity and leverage of non-financial enterprises.Therefore,this paper focuses on the market-oriented debt-to-equity swap of state-owned enterprises,discusses the risk of debt-to-equity swap of state-owned enterprises,and designs the risk prevention and control system of state-owned enterprises.When the State implements debt-to-equity swap and state-owned enterprises need to implement debt-to-equity swap to alleviate the financial crisis,it is of certain significance to pay attention to the risks that state-owned enterprises may encounter in the process of debt-to-equity swap and to prevent and control them.It is found that since the issuance of the Guiding Opinions,domestic scholars have done a lot of research on this debt-to-equity swap,but most of the research is to analyze the difference between the two rounds of debt-to-equity swap or to study the implementation problems such as "landing difficulties" existing in the process of debt-to-equity swap and to analyze whether debt-to-equity swap can effectively solve the problem of high leverage ratio.From the point of view of state-owned enterprises(debtors),there are few studies on the risks and prevention and control mechanism of debt-to-equity swap.Based on this,this paper uses case study method,under the relevant literature and theory and the induction and analysis of the status quo of debt-to-equity swap in China,carries out case analysis on the project of debt-to-equity swap in China’s aluminium industry,studies the risk sources of debt-to-equity swap in state-owned enterprises,and designs the risk prevention and control mechanism.This paper is innovative in studying the risk faced by the debtor and the prevention and control mechanism as well as the case analysis of the two-step new model of debt-to-equity swap.In order to prevent and control these risks,we should improve the corporate governance structure,set up risk prevention and control departments,build risk prevention and control safeguard mechanism and improve the exit channel of equity.