Analysis And Prevention Of Bond Default Of Private Enterprises

Though the bond market in our country starts relatively late,but develops rapidly,issuing bonds has become one of the most important ways of financing in the capital market to domestic enterprise.As the bond market scale expands unceasingly,the bond credit risk began to releases gradually.In 2014,the first material default of bond occurred,breaking "the rigid" of the bond market in our country,then the phenomenon of default is growing,the bond default rate of private enterprise is significantly more than state-owned enterprises,so the study on bond defaults of private enterprise in our country is of great significance.At present,the discussion about private influencing factors and preventive measures of private enterprises caused wide attention of scholars.However,existing literature focused on the whole event of default on the bond market in our country more than the private enterprises,especially the preventive advice more focused on the system of government and market than micro main body(bond investor and issuer),and the two micro main bodies are the default direct stakeholders of the bond default.This paper will combine the characteristics of China’s bond default trend and regulatory rating system,carry out research on the external factors and internal factors which lead to private enterprise bond default,and put forward targeted risk prevention suggestions.Firstly,the influencing factors and the precautions of the bond default risks in the existing literature were sorted out,and the bond default trend of Chinese private enterprises were introduced.Secondly,the external and internal factors of bond default were discussed.Finally,taking WINTIME ENERGY CO.,LTD.as an example,the reasons for the default of WINTIME ENERGY CO.,LTD.’s bonds were analyzed with the improved Harvard Analysis Framework.The main findings are as follows:(1)Firstly,the internal factors are the key to bond defaults in private enterprises.Compared with state-owned enterprises,the increase in debt repayment pressure of private enterprises,the high equity pledge rate,and weak corporate governance and internal control have increased the bond default risks.Secondly,external factors have an indirect impact on the bond defaults.The external influencing factors of private enterprise bond defaults mainly include macroeconomics,industry development factors and related policies.Among them,the indirect impact of related policies have greater influences on the private enterprises than the state-owned enterprises.Economic policies such as supply-side structural reforms,equity financing policies,and financial de-leveraging have increased the bond default risks in private enterprises.(2)The case of WINTIME ENERGY CO.,LTD.also shows that the company’s main business is greatly affected by industry development and policies.The company’s profitability and solvency will affect the bond default risks.The enterprises should adjust the strategies according the external factors.At the same time,the unreasonable accounting treatment of WINTIME ENERGY CO.,LTD.and the concealment of related party transactions also increase the bond default risks.Private enterprises need to prevent financial risks as much as they can.