Research On The Causes And Prevention Of The Default Risk Of A Company’s Bonds

In recent years,China’s bond market has developed rapidly.With the expansion of bond financing,followed by the "normalization of bond default".The types of default bonds have expanded from ordinary corporate bonds to Super & Short-term Commercial Paper,which has gradually attracted the attention of the market.A Company is the leading enterprise in the pig breeding industry.The default of A company’s bond belongs to a black swan event,but it is also a typical event that the Private Enterprise in the context of deleveraging and capacity reduction get into financial distress and eventually lead to the outbreak of credit risk.Taking the default of a period of ultra-short-term financing debt issued by the A company in 2018 as an example,this paper constructs a theoretical framework for analyzing bond defaults by using a series of research methods,such as literature research,case analysis,investigation research and comparative analysis.It tries to explain the reasons behind the default of the bond from the macro,industry and enterprise aspects,and through the analysis of the information asymmetry before and after the issuance of the bond,it is found that the key to avoid such default is the regulatory agencies and rating agencies.Firstly,this paper elaborates the background of the topic selection and the existing literature research results,then introduces the basic situation of A company and the issuance,default and final payment of bond in the case,measures the credit risk of A company through KMV and Z-Score model,and presents the change of its credit risk including the change of Credit Rating.Then,through an in-depth analysis of the external environment of the market and the internal environment of the company itself,the paper finds that: macroeconomic downturn,industry supply and demand imbalance is the external reason for the A company’s bond default;the company’s financial deterioration into liquidity crisis and imperfect corporate governance are the internal reason for the A company’s bond default,and the lack of supervision before and after the issuance of A Company’s bond also played a key role.Finally,the paper draws the case enlightenment,and puts forward suggestions for how to avoid and prevent bond defaults of similar enterprises in the bond market.