Research On The Impact Of Credit Risk Of Coal Bond Issuing Enterprises

In 2018,the coal industry made the year-on-year increase was 5.2%which indicats that the overall profit of the coal industry is getting better.However,when the benefits of the coal industry are getting better and better,bond defaults happened in the industry frequently.These 120 bond defaults,34 occurred in the coal industry,accounting for the largest number,and 6 of 43 default bond entities,accounted for a third.Either the number of default events or the number of default bond entities reflected lower severity of bond investment in the coal industry.It is of great practical significance to study the credit risk of bond-issuing enterprises in the coal industry.Wintime Energy is the largest private energy company in the coal industry.On July 5,2018,Wintime Energy failed to repay the maturing funds of 17 Wintime CP004 which constited the material default.After this bond default,10 bonds defaulted again.What’s more,Multiple bonds expire in July and August,the total amout is 69 billion yuan.What’s more,13 bonds were involved in the cross-default clauses.Multiple bonds will expire in the second half year,with a total amount of 109billion yuan.After the event of default,the long-term credit rating of Wintime Energy was continuously lowered from AA~+to CC which attracted extensive attention from investors and the capital market.Editor takes coal enterprises that have issued bonds from 2013 to 2018 as samples.Through the establishment of panel data,the Logit model is used to analyze the factors affecting the credit risk of coal debt issuing enterprises.After stepwised all the variates,editor got the main influential variates.At the macro level the regional CPI,regional PPI are the main variates.These variables are negatively correlated with credit risk.It means that the higher regional CPI,regional PPI is,the lower credit risk is.At the micro level,current ratiol,the ratio of current asset,total asset turnover,and growth rate of operating profit have a significant impact on the credit risk.These indicators are negatively correlated with credit risk.It means that enterprises have a higher level of these indicators,the probability of credit risk is lower.Based on the above research background,editor makes a deeper analysis about the causes of the default event of Wintime Energy.Editor finds that firstly overall downward pressure on the coal industry,leading to lower production efficiency.Secondly,the enterprise management investment strategy is too aggressive,causes the enterprise scale to expand rapidly.However,output efficiency can not keep pace with the pace of enterprise expansion.It leads to unbalanced development of enterprises.Thirdly,the excessive proportion of restricted assets weakens the liquidity of assets and affects the solvency.Fourthly,excessive reliance on debt financing.Since 2013,Wintime Energy have issued bonds for many times,and the funds raised are mostly used to repay loans and previous debts,as well as to supply for working capital.Once the new debt issuance fails,the capital flow of enterprises will fall into a passive situation,leading to the occurrence of bond default.Finally,combined with industry research and case studies,author puts forward some suggestions for bond investors,issuers and regulators.