Case Study Of Bond Default Event Of Yongmei Holdings

While the stock size of China's bond market is increasing,the credit risk in the market is also accumulating.Credit risk began to be exposed in 2014,when the first credit bond default occurred in China.Especially in recent years,with the implementation of policies such as the decline of China's economic growth and financial deleveraging,the market credit has tightened and credit bond default events have been clustered on a large scale.The frequent occurrence of credit bond default events may have an impact on the credit of the entire bond market.If the market credit foundation is shaken,it may affect the process of the entire capital market reform.From 2015 to the first half of 2019,the default subjects were mainly concentrated in private enterprises.Beginning in the second half of 2019,affected by the credit risk event of Baoshang Bank,the belief of "rigid convergence" in financial institutions was broken,market liquidity was significantly tightened,and the pressure of bond market financing increased,coupled with the existence of implicit government guarantees and long-term over-indebtedness of China's state-owned enterprises,some state-owned enterprises' debt risk was exposed during the period of concentrated debt payment.By 2020,China's high-rated state-owned enterprises have experienced thunderstorms one after another,ushering in the climax of state-owned enterprise bond defaults,the rigid payment expectations in the credit bond market basically no longer exist,and the government's implicit guarantees have gradually become invalid.Among them,the bond default event of Yongcheng Coal and Electricity Holding Group Co.,Ltd.has a large impact on the credit bond market.As a high-rated local state-owned enterprise,its default event completely exceeded the expectations of the credit bond market,which aroused investors' doubts about the local government's malicious evasion of debt and whether the credit bond market firmly followed the path of capital market reform and opening up.The reasons behind its default deserve deeper consideration.This article selects the Yong Coal Holdings bond default as a case object and analyzes the case in depth by combining the research results of some scholars and relevant theories.The article first introduces the basic situation of Yong Coal Holdings,then reviews the event in chronological order from the major events before the default of Yong Coal Holdings bonds,the development of the default event and the disposal after the default,followed by an analysis of the default risk of Yong Coal Holdings based on relevant financial indicators,and then specifically analyzed the reasons for its default from external factors and internal factors,and finds that the external reasons for the default of Yong Coal Holdings are mainly the tightening of corporate financing caused by regional liquidity stratification,the decline of industry cycle prosperity affecting corporate operation,the inflated credit rating lag affecting the scale and structure of corporate liabilities,and the local government's abandonment of the repayment guarantee for the debts of local state-owned enterprises,while the internal reasons are mainly the poor operation of diversified businesses leading to the swallowing of profits,the unreasonable structure of debt maturity leading to the increase of short-term debt payment pressure,the liquidity limitation caused by the occupation of related party funds,the false disclosure of information with a view to create the illusion of sufficient cash flow.Finally,the paper gives insights mainly at the level of relevant institutions,enterprises themselves and bond investors.The recommendations for relevant institutions are mainly from the perspective of market regulators and credit rating agencies,the suggestions at the market regulators level mainly include establishing a unified and perfect market supervision system and strengthening the transparency of bond market information disclosure;the suggestions at the credit rating agency level mainly include strengthening the reputation restraint mechanism of credit rating agencies and regulating the business of credit rating agencies.The suggestions for enterprises themselves include optimizing financing structure,avoiding over-indebtedness and strengthening internal management and standardizing operation.The suggestions for bond investors are to focus on the analysis of enterprise fundamentals,establish risk awareness and rational investment.