Research Of Motivation And Effect Of Marketization Debt-to-equity Conversion Of Private Enterprises

In 2016,the State Council issued the "guidance on debt to equity swap of market-oriented banks",marking the beginning of China's market-oriented debt to equity swap.This round of market-oriented debt to equity swap adheres to the principle of "marketization,legalization,orderly development and overall coordination",and helps high-quality enterprises with good development prospects but temporary difficulties.Since the introduction of market-oriented debt to equity swap policy,most of the enterprises that implement debt to equity swap are state-owned enterprises,and there are few successful cases of private enterprises.Private enterprises are playing an increasingly important role in China's economic operation.The study of market-oriented debt to equity swap of private enterprises may provide new ideas for improving the financial situation of private enterprises and enhancing the operation efficiency of private enterprises.Huayou cobalt is a private listed company and the largest manufacturer of cobalt products in the world.Its industry is nonferrous metals rare metals.The industry is characterized by high debt ratio and strong periodicity.Due to the impact of the volatility of cobalt price in 2018,Huayou cobalt is faced with the "double high risk" of high debt ratio and high equity pledge rate,and implemented the market-oriented debt to equity swap on October 8,2018.In this paper,through literature research,case study,event study and financial index analysis,we will study the motivation and implementation effect of market-oriented debt to equity swap of Huayou cobalt industry.In the aspect of implementation motivation,it is found that before debt to equity swap,Huayou cobalt industry is faced with industry cycle downward risk,its own liquidity risk and high equity pledge rate risk;in addition,Huayou cobalt industry is distributed to new energy industry,which belongs to the enterprise type supported by market-oriented debt to equity swap;at the same time,there are many successful cases of market-oriented debt to equity swap in the market.It is because of the superposition of these factors that Huayou cobalt finally implements the market-oriented debt to equity swap.In terms of implementation effect,this paper analyzes from three dimensions: market effect,financial indicators and non-financial indicators.Finally,we draw the following conclusions: The market-oriented debt to equity swap improves the capital structure and short-term liquidity of Huayou cobalt industry,enhances the anti risk ability of the enterprise,and effectively reduces the equity pledge rate of Huayou cobalt industry in the short term,so as to help the transformation and upgrading of the enterprise.However,the market-oriented debt to equity swap has little effect on improving the profitability of Huayou cobalt industry.Due to the cyclical characteristics of Huayou cobalt industry,debt to equity swap only solves the temporary difficulties of the enterprise,and does not fundamentally improve the financial situation of the enterprise,so the long-term improvement effect is limited.Through the research on the motivation and effect of market-oriented debt to equity swap of Huayou cobalt industry,this paper hopes to provide value for the research of market-oriented debt to equity swap of private enterprises.