Shenwu Environmental Bond's Default Reasons And Risk Early Warning Analysis

The bond market is an important part of China’s financial market.In recent years,with the development of the bond market,the default risk of the bond market has gradually accumulated.On March 4,2014,the “11 Super Day Debt” declared a formal default and became the first public offering in China.After the bond defaulted,the bond default incident broke out one after another.After entering the 2018,the environmental protection enterprises in the bond market newly added were the hardest hit areas.Therefore,in the context of the country’s vigorous efforts to control environmental protection,the in-depth analysis of the reasons for the breach of the environmental protection enterprise and The credit risk warning of environmental protection enterprises is particularly important,which has certain practical significance for promoting the stable development of China’s bond market and the development of environmental protection enterprises.This paper takes the “16 shenwu environmental protection bond” default incident as the research object,and introduces the discussion on the default risk of Shenwu environmental bond.Following the basic steps of the case analysis,the basic introduction of the case is firstly introduced,which is described and analyzed from the environmental protection industry overview,the basic introduction of Shenwu environmental protection,and the environmental protection default process of Shenwu;then from the perspective of macroeconomics,environmental protection industry,and company perspective The fog environmental bond-“16 shenwu environmental protection bond” of the reasons for breach of contract analysis,the main reason for the bond default is that the company seeks business expansion in the context of the deterioration of the environment,the long return period of a large number of construction projects lead to a high proportion of accounts receivable,In the case of poor returns,the company’s cash flow continued to flow,which led to a liquidity gap.Secondly,in the context of the company’s short-term solvency and profitability decline,the company’s repayment of short-term debt pressure was toolarge in order to expand its business to expand its short-term debt ratio.The risk of default is expected to be large.In the empirical analysis process,the revised KMV model is used to measure the default distance and default probability to measure the credit risk level of Shenwu Environmental Protection from the third quarter of 2012 to the second quarter of 2018.In order to comprehensively and accurately analyze the change of credit risk level of Shenwu Environmental Protection,select The Z-score model measurement results and credit rating results are compared with the measurement results of the revised KMV model.The measurement results show that from the second quarter of 2017,the default distance DD gradually decreases,and the default probability EDF continues to rise,and then until the end of 2017,the company’s credit The risk level is still at a high level as a whole,and the probability of default in the next year is very high.This is consistent with the fact that Shenwu Environmental Protection has experienced a liquidity gap since the second quarter of 2017 and induced “16 shenwu environmental protection bond”default.It coincides with the time when the company officially announced the bond default in 2018.Through empirical analysis,it helped investors to provide effective risk warning for the credit risk of Shenwu Environmental Protection Company,providing sufficient time for investors to avoid risks in time.Finally,this paper proposes targeted policy recommendations from the four aspects of bond market supervision,Shenwu environmental management,investor protection,and post-disposal of bond defaults,and finally proposes follow-up research.