Case Study On Technical Default Of Orient Landscape Bond

Bond default events have only begun to appear in recent years.At present,most researches on bond defaults have focused on macro market analysis and case studies of substantive default events,and relatively few studies on technical default issues.However,with the increasing number of technical defaults,it has had a negative impact on the bond market and investors.When the company fails to redeem the bonds in a timely manner,the reasons for disclosure are mostly "technical" reasons.The domestic practice field calls this phenomenon a technical default.Although the issuer has completed the redemption of the bond,the company that actually experienced the technical default Most of them contain the risk of substantial defaults.Since China 's bond market is underdeveloped,most investors cannot detect it in time.The continuous occurrence of such incidents has caused certain losses to investors,disrupted the normal order of the bond market,and adversely affected the creditworthiness of issuers.Therefore,the market,issuers and investors should pay more attention to such events.Orient Landscape is a leading enterprise in the domestic garden ecological industry and a representative private enterprise.The technical default event of the bond "18 Donglin CP002" has attracted high market attention and is relatively new.The event is also accompanied by a large substantial default risk.The selection of Orient Landscape as a case study object in this article is typical and representative..This case paper takes the technical default event of Orient Landscape Bond "18 Donglin CP002" as the starting point,and uses literature research methods,case analysis methods,financial analysis methods and other methods to explore the real reasons behind its technical default and whether there is a substantial default risk.This article first introduces the case events,and then analyzes the external macro environment of the Orient Landscape,the company's internal governance,and the company's financial status,and uses the Z-score model to verify the existence of its default risk.Finally,the following conclusions were drawn:(1)The financial personnel of the subsidiary Shanghai Liyuan ignored the bond redemption rules and did not strictly implement the company's financial management system,resulting in technical defaults.Poor internal control of the company is the apparent cause of its technical breach.(2)In order to prevent systemic financial risks and prevent excessive leverage,in recent years the country has not only tightened monetary policy,but also strengthened financial supervision,the overall social liquidity has declined,private enterprise financing is difficult and expensive,and PPP industry policies are strictly regulated It also puts forward higher requirements for the development of Orient Landscape Business.The tightening of the external environment is the external reason for its high credit risk.(3)Since the transformation,the investment in Orient Landscape has been too fast,and the short-term debt is too high,and there is a phenomenon of short-term long-term investment.Although profits have increased year by year,there is less cash flow,which is not enough to cover the annual debt due,and basically rely on the "borrow the old to pay the old" model to maintain business operations.In addition,the high equity pledge rate puts the company at risk of transferring control rights in the face of negative effects,so internal factors of the company are the main reason for the higher credit risk.Finally,according to the conclusion of this article,the corresponding enlightenment is put forward from three angles of bond issuer,regulator and investor.