Study On Causes And Counter Measures Of Corporate Bond Default

Before 2014,due to the support of the government and financial institutions in China’s bond market,there has been a phenomenon of "rigid payment" of bonds,and there has never been a substantial bond default.At present,the economy has entered the "new normal",and the slowdown of economic growth and the adjustment of industrial structure have led to the downward pressure on the economic trend.As a result,credit risks in China’s bond market have begun to erupt,and corporate bond defaults have begun to occur frequently.Firstly,this paper makes a holistic analysis of the default situation of the bond market by using the inductive analysis method,and summarizes the characteristics of the default subject in the bond market,the term structure of debt issuance,the region of debt issuance subject and so on.Then,according to the analysis method combining case and theory,the influencing factors of ZhongHong corporate bond default event are analyzed in depth from the macro,industrial and corporate levels.Finally,it is found that the intuitive reason for this bond default is the tight liquidity when the payment is due and the company’s capital chain breaks down.In addition,there are other reasons,such as the regulation and control of industrial policies,the strict supervision of the real estate market,the continuous decline of the company’s operating conditions,the highly leveraged acquisition of overseas assets,the limited financing scale and channels,and the poor financial situation.Finally,from the point of view of controlling the default of corporate bonds,combined with the continuous bond default cases of ZhongHong company,this paper finds out the problems and puts forward relevant countermeasures and Suggestions for the bond default.This paper mainly comes to the following conclusions: first,the macroeconomic downturn,industrial policy reform and deterioration of the company’s operating conditions and other factors are important factors for the occurrence of bond default;Second,from the perspective of financial indicators of the case,relevant financial indicators such as net interest rate of sales,rate of return on total assets,liquidity ratio,capital structure and interest guarantee multiple can give early warning to the default risk of bonds.When these indicators deteriorate,the company can detect the default risk of bonds earlier.Third,the results of bond market’s bond rating,a rating agency has inflated and lag phenomenon,evaluation result can not reflect the main body and the bond credit risk,bond issuance so perfect credit rating method,to set up the comprehensive risk identification framework,build a default debt risk warning mechanism for regulators and investors is very important.This paper hopes to put forward some feasible countermeasures and Suggestions to control bond default through the research on related issues of bond default,to help relevant subjects reasonably protect their fundamental interests,and at the same time to improve the company’s standard operation and improve its internal control system,so as to reduce or avoid the occurrence of unnecessary default risk.Also hope to improve the bond market risk awareness and promote a healthy and stable bond market mature development.