Case Study On Bond Default Of Jinhong Holding Group Co.,Ltd.

In 1981,with the release of the regulations on treasury bonds by the State Co uncil,China's Ministry of finance began to reissue treasury bonds.This has also op ened the curtain of China's bond market.In recent years,with the rapid economic development of our country,the demand of enterprises for funds is growing,and th e government has issued more and more policies that are conducive to the develo pment of bond market.Although compared with other countries,China's bond mark et started late,but the growth rate of China's bond market is faster,the types of b onds issued,the regions and industries of the main body of bonds issued are mor e and more diverse,and the amount of bonds involved is also larger.At present,China has surpassed Japan,from the third largest bond market in the world to the second largest bond market after the United States.In contrast to the fast-growing bond market,the number of bond default events in China is increasing.By 2019,there are 38 new bond defaulters in China,and private enterprises account for 89.5% of them,34 in total.In 2019,the total amount of bond default reached RMB 143528 million,10 times of 2014.Jinhong Holding Group Co.,Ltd.was founded in February 1985 in Jilin high te ch Zone,formerly known as CNPC Jinhong Energy Investment Co.,Ltd.,and once used the names of Leading Technology and Jinhong energy.On August 27,2015,Jinhong holdings failed to pay the principal of 394 million yuan of resale bonds a nd 40 million yuan of interest(a total of 434 million yuan),resulting in its issuance of "15 Jinhong bonds" constituting a material breach of contract.On January 15,2016,Jinhong Holding Group officially announced that "16 CNPC Jinhong MTN001" issued by the company had a material breach,with a default amount of 820 millio n yuan.So far,the "15 Jinhong bonds" and "16 CNPC Jinhong MTN001" bonds of Jinhong holding company have defaulted,with a total amount of 1.2 billion yuan.This paper analyzes the causes of bond default of Jinhong holding group from three aspects: macro environment,company's own operation and external supervisi on.First of all,from the macro level,China attaches great importance to deleveragi ng and strict financial supervision.The financing channels of enterprises have been reduced,capital turnover is more difficult,and capital flow is increasingly tense.In addition,the development of the natural gas industry in which Jinhong holdings is located has been greatly influenced by the policies issued by the state in recent y ears.In August 2017,China's development and Reform Commission proposed that the gas industry should reasonably price the transmission and distribution links and strengthen the supervision of the cost.After the policy was issued,the local gover nments responded to the policy.In 2018,most regions reduced the total investment yield of gas distribution price to below 7%.This move has led to lower natural ga s prices,higher costs for gas companies and lower gross profit.In terms of the company's operation,there are several reasons for the default of its debts.Through the calculation and analysis of financial indexes of short-termand long-term solvency of Jinhong holding group,this paper understands the solve ncy level of the company.Through the analysis of the company's total operating re venue,total operating cost,total profit and net profit in 2014-2018,the company's profitability is understood.Finally,the paper discusses the cash inflow and outflow of the company based on the company's strategy.From the aspect of corporate fin ance,this paper studies the causes of default of "15 Jinhong bonds" and "16 CNP C Jinhong MTN001".In addition to the financial aspect,the strategic decision-makin g of the company,the attention of the regulatory agencies and the effectiveness of the rating results are also the reasons for the bond default of Jinhong holding gro up.In view of the reasons for these bond defaults,this paper puts forward corresponding enlightenment and suggestions.As for the main body of bond issuance,enterprises should innovate in their own fields,invest more cautiously,ensure the good financial situation of enterprises,and ensure the sound development of enterprises.Regulators need to understand that in the process of issuing bonds,regulators play a very important role.Therefore,the regulatory authorities should do a good job in the regulatory work,improve the regulatory mechanism and relevant laws and regulations,and make certain measures before bond issuance,after bond issuance and after bond default to maintain the stable development of the bond market and guide and regulate the bond market.Credit rating agencies should also ensure the reliability and authenticity of credit rating results,protect the interests of investors,and update the tracking rating of companies and bonds corresponding to rating reports from time to time.In addition,for rating agencies whose rating results are quite different from the actual situation,the regulatory authorities can take certain punishment measures.This paper hopes to be able to analyze the bond default events of Jinhong holding group,and bring some inspiration to enterprises and regulators in bond repayment and risk management.