Research On The Motivation,Method And Effect Of Sinosteel Deleveraging

Affected by the central bank's macroeconomic stimulus policies,some cyclical companies in my country have excessive leverage.From a corporate perspective,high leverage increases corporate debt repayment risks and pressures;from a macro perspective,it leads to increased social and economic systemic risks.Therefore,in 2015,my country formally proposed to comprehensively promote supply-side structural reforms,and issued economic work arrangements such as "three removals,one reduction and one supplement",and deleveraging was the primary task of this reform.Companies have also begun to take a variety of ways to deleverage,lower the leverage ratio,in order to reduce risks.The steel industry is a typical cyclical industry with generally high leverage and high financial risks.Iron and steel companies have begun to reduce the asset-liability ratio through deleveraging,avoid the risk of default,and seek sustainable development.Sinosteel is a well-known state-owned enterprise in my country.Under the impetus of supply-side reform,it first carried out "deleveraging" and gained some successful experience,which is typical in the steel industry.This article takes Sinosteel as the object of case analysis,based on the theoretical basis of capital structure,capital cost and risk management,theoretically analyzes the motivations and methods of deleveraging,and uses this as theoretical guidance.Based on the current development of Sinosteel,Analyze the motivation and method of its deleveraging,and scientifically evaluate its impact on debt solvency,profitability,corporate competitiveness and internal equity structure after deleveraging.The study found that debt-to-equity swaps effectively reduced the leverage ratio in the short term,but the effect is not significant in the long run;Sinosteel needs to seize the opportunity to use the improvement in operations brought about by the debt-to-equity swap as a pedal,eliminate outdated production capacity and improve internal operations,Using various means to continuously implement deleveraging,and at the same time verifying that the deleveraging method of asset divestiture can allow the company to focus more on the development of important business resources,so that the company's resources can be optimally allocated,and the company's sustainable development can be guaranteed.Through the research on Sinosteel's deleveraging,it is concluded that the company's deleveraging needs attention.In addition to debt-to-equity swaps that cannot reduce risks in the long-term,there are also factors such as the accumulation of debt caused by excessive investment in the early stage,and the single financing channel,and the problem of high leverage.It is difficult to solve quickly in a short time.Based on this,this article puts forward four targeted suggestions:(1)Deepen the corporate transformation and upgrading strategy;(2)Broaden financing channels and encourage direct financing;(3)Use marketization to solve the problem of conversion ratio;(4)Use multiple methods Mixed deleveraging.