Case Study On Bond Default Of Wintime Energy Co.,ltd

Equity financing and bond financing are two important financing channels.Since launching the first issue of bonds in 1981,bond market in China has experienced 40 years,including corporate bonds in 1983,short-term financing bonds in 2005,corporate bonds in 2007,medium-term notes in 2008 etc.To date,the total stock of Chinese bond market is about 87.49 trillion yuan by March 19 th 2019,which ranked third in the world.Despite significant development over the past few decades,there are still lots of problems in Chinese bond market,particularly when the government instigated a series of macroeconomic reforms in recent years and the developmental pattern of Chinese economy has converted form high-speed to medium high speed.From 2018 to March 2019,the total number of Chinese bond default was154,which amounted up to 140.947 billion yuan with accounting for 62.48% in history and of which private corporate default cases account for the vast majority.We reviewed the literature for published reports on bond defaults and then analysed the causes of bond defaults in Wing Tai energy and its corres ponding reaction.We found that Wing Tai energy bond defaults mainly dued to internal and external causes.Internal reasons were as follows.First,frequent adjustment of business strategies and aggressive and over-capacity investment resulted in debt.Secondly,internal liquidity squeeze,a large short-term debt maturity scale,weak anti-risk capability.Thirdly,there were problems with the company including the mother of the child with debt,internal mismatch of resources and funds scheduling difficulty of the group,resulting in severe debt pressure for the parent company.External causes were considered for the following reasons: First,deteriorating industry environment.Second,macro-control form the government in some overcapacity industry including the coal industry Third,special events like low quality of information disclosure affected investors’ faith and then further deteriorated in external financing environment.To resolve the debt default,agents of Wing Tai Energy Corporation negotiated wit h shareholders,creditors,government and many other issuers and ultimately chose debt restructuring.Retrospective analysis of the bond default and disposal process was performed in this article.We analyzed the causes of non-compliance from the the company’s internal supervision and industry level and finally put forward some disposal measures and inspirations from the points of view of company.