| China’s bond market has boomed in recent years.Issuing bonds has become one of the important financing methods of enterprises.However,with the rapid growth of bond issuance,more and more default events have begun to appear in the bond market.Since the "rigid payment" phenomenon was broken in 2014,China’s bond default phenomenon has gradually normalized.The frequent occurrence of bond defaults exposes a large amount of potential risks in the market,and it damages the interests of investors and adversely affects the healthy and stable development of the bond market.From the perspective of the type of defaulting issuer,private enterprises have always occupied the highest proportion of defaulting subjects.As a large private listed company in Shanxi Province,Wintime Energy has experienced a number of bond defaults since 2018.The scale of the default was large and the impact was widespread.This case is typical and representative.Therefore,studying the causes of Wintime Energy bond defaults can provide the same type of enterprises with measures of preventing bond default risk.This article mainly adopts the case study method,selects Wintime Energy as the research object,and analyzes the root causes of bond defaults.First,this article defines the related concepts of bond default and introducing the related theories.Next,it introduces the basic situation of bond default cases of Wintime Energy.It sorts out the issuance of various types of bonds and reviews the process of bond defaults.Then the article comprehensively and deeply analyzes the causes of the default of Wintime Energy bonds from two perspectives: internal factors and external factors.This paper finds that among the internal factors,blindly pursuit of diversification strategies,implementation of aggressive investment and financing strategies,the decline of company’s refinancing capabilities,irregular internal governance of the company,and the deteriorating financial condition directly caused Wintime Energy to fall into the dilemma of bond defaults;among the external factors,the downturn in the macroeconomy,the sluggish industry development,external regulatory loopholes,and falsely high third-party credit ratings made Wintime Energy’s default risk gradually accumulate,and eventually a bond default event broke out.At last,the paper puts forward corresponding measures to prevent bond default risks from both internal and external levels: the enterprise itself should reasonably determine the development strategy,carefully formulate investment and financing strategies,and actively enhance its refinancing ability,constantly improve the level of corporate governance,and optimize its own financial situation.These can effectively avoid the occurrence of bond defaults.From an external perspective,the bond market should establish a unified regulatory system,strengthen the supervision of third-party credit ratings and improve the quality of ratings,which can effectively prevent bond default risks.Based on a case study of bond default of Wintime Energy,this article draws the following conclusions.First,defects in the internal management of the issuer and deteriorating financial conditions are the main causes of bond defaults.Second,unfavorable factors in the external environment will also create potential risks for the issuer’s bond default.The innovation of this paper is mainly reflected in two aspects.First,this article analyzes the causes of bond defaults from the perspective of corporate strategy and proposes that improper development strategy is one of the key internal factors.Second,this article also conducted an in-depth analysis from the perspective of third-party rating and proposes that false third-party credit rating and adjustment lag are the important external factors for the outbreak of default. |
