Case Study On Bond Default Of Wintime Energy Co.,Ltd.

Under the background of economic downturn and credit contraction,there has been a wave of defaults in China’s bond market in recent years,with the number and amount of defaulted bonds constantly reaching new highs,and the default subjects are mostly private enterprises.Wintime energy is a microcosm of this.Since the rigid payment was broken,Wintime energy defaulted with 16 bonds,totaling 17.8 billion yuan,becoming the private listed company with the largest number and amount of defaults in the bond market.Its default event had a big negative impact on the whole bond market.The study of Wintime energy bond default has certain reference significance for the majority of small and medium-sized private enterprises to prevent liquidity risk.Based on financial distress,default,breach of contract,disposition after carding domestic and foreign related research theory,reviewed the whole event,and then from the outside of the boom of industry,financing environment and the internal management strategy,profit ability,debt structure and other aspects of default reasons are analyzed,and using the Z-score of default risk model is verified.Through research,this paper believes that the bond default of Wintime energy is mainly due to:in the early period of loose credit policy,the enterprise borrowed a lot of foreign investment,mergers and acquisitions,aggressive expansion,to achieve rapid growth of asset size,but also a heavy debt burden.Such a model cannot continue under the background of increasingly strict regulation.The financial deleveraging and strict regulation since 2017 have significantly reduced the risk appetite of the market and comprehensively reduced the financing channels of enterprises.As a result,Wintime energy’s capital turnover is difficult and liquidity shortage eventually turns into a repayment crisis.Then,in view of the causes of default,this paper puts forward the following countermeasures,such as reducing the layout level of diversified industries,returning to the main business as soon as possible,stripping non-main business assets,improving profitability and introducing strategic investors for debt restructuring,from the perspective of ensuring the production and operation of enterprises and reducing debt ratio.Finally,from the perspective of enterprises,credit rating agencies and regulators,this paper concludes that in the process of cross-industry expansion,enterprises should prudently treat the changes of external industry and financing environment,and reserve sufficient financial safety margin.Rating agencies should strengthen their independence and timely warn of risks.Regulators should speed up the establishment of diversified default bond disposal mechanism to better protect the interests of bondholders.