Research On The Motivation,model And Effect Evaluation Of Market-Oriented Debt To Equity Swap In Power Industry

In October 2016,The State Council issued the guiding opinions about the market-oriented debt to equity swap,then a new round of debt to equity swap was raised.Unlike the last round of debt to equity swap targeted at the problem of non-performing assets of wholly state-owned banks,this one raised by state is hoping to reduce the leverage rate of enterprises.Under such a background,stateowned enterprises with debt conditions were emerging,after the first central company has finished the market-oriented debt to equity swap,the subsequent case of debt to equity swap mostly followed this model-Fund model which also known as the big line model,it has become the mainstream model in this new round of debt to equity swap.Because of the special timing,motivation,positive effect and undesirable risks to the market,this round of market-oriented debt to equity swap has attracted the attention of the society.However,the time of researching on market-oriented debt to equity swap is short,the existing discussion is lack of depth study which limited to media reports and social reviews.The topic and the perspective of this paper is unique,from the perspective of the power industry,which is eager to cut excessive industrial capacity and deleverage.This paper has make a useful exploration on the motivation,mode and effect of marketoriented debt to equity swap which has positive significance for enriching relevant theoretical research.This paper is based on related papers and theories,from the perspective of power industry,including the analysis of industry background and model selection.Combined with the actual case of G electric power company,a thorough study of the market-oriented debt to equity swap's motivation,mode,utility,risk etc.was made.The results show that the market-oriented debt to equity swap is an effective measure of debt restructuring and industrial upgrading for companies who has high debt ratio or temporary trouble which because of cyclical reasons but has good prospects for the development.It is an effective means to defend the risk of high debt.On the one hand,market-oriented debt to equity swap reduce the asset liability ratio of enterprises and solve the financial difficulties.On the other hand,it solve the large loans in enterprises,and reduce the risk of increasing non-performing loans in bank.But at the same time,market-oriented debt to equity swap is not necessarily resolve all the risks,it has only transfer risks to shareholders,creditors and investors,and even increase risks.