Research On The Operation Mode And Performance Of Marketoriented Debt-to-equity

In recent years,the debt scale of many enterprises in China has grown rapidly,the level of leverage has been too high,and the debt burden has been increasing.Under the background that the international economic situation has been relatively sluggish and China is facing a large downward pressure on the economy,the profitability of many enterprises is declining and the debt risk is further rising.De-leverage is one of the five major tasks of the supply-side reform.Its main content is to reduce the leverage of enterprises.In October 2016,the Chinese government issued the “Guiding Opinions on Converting Equity from Marketized Banks” to guide and promote the legalization and market-oriented debt-to-equity swaps of banks and enterprises,aiming to help enterprises effectively reduce their debt levels and Leverage,prevent and resolve its debt risk,improve business capability,and boost supply-side reform.In this context,in October 2016,the “Guidance Opinions” on the self-debt-to-equity swap was issued.Yunxi Group and China Construction Bank soon signed a market-oriented debt-toequity investment agreement with a total investment of 10 billion yuan.This is also the country's first local state-owned enterprise debt-to-equity swap project.This paper takes this debt-to-equity case as the research object,analyzes its motivation,operation content and performance and risk and finds that this debt-to-equity swap is under the policy dividend of market-based debt-to-equity swap,CCB and Yunxi Group In the case of the operation of both parties,the operation of the Yunxi Group fully reflects the market-oriented characteristics of the policy guidance for this debt-toequity swap,and at the same time,innovates in light of its own actual situation.In terms of performance,the short-term performance and long-term performance of the debt-to-equity swap are relatively obvious.The Yunxi Group has optimized the capital structure and achieved the staged goal of turning losses into profit,but the long-term development still needs to be exerted;In the operation design,the investment conditions and the conditions for participating in corporate governance are set,and the risk of debt-to-equity swaps is controlled and reduced.This paper finds that in the context of this market-oriented debt-to-equity swap,the company has designed a new type of market-oriented debt-to-equity swap operation for debt-for-equity swaps,which has played a role in de-leveraging,reduced debt risk and improved profitability;This paper summarizes the experience of debt-to-equity swaps and makes recommendations on deficiencies,and intends to provide reference for other companies to market-based debt-to-equity swaps.