A Case Study On Lifan Technology’s Bond Default

In recent years,China’s corporate bond market has developed continuously.Bond financing has become an important channel of corporate financing.However,with the increasing downward pressure on China’s macro economy and other reasons,the credit risk in the market has been continuously released,and the amount and scale involved in bond default show an overall upward trend.In 2020,28 defaulting entities were added,and 77 bonds were defaulted,involving an amount of 65.621 billion yuan.At the same time,as a strategic and pillar industry of China’s economy,the automobile industry has always had a "common problem" of weak core competitiveness of independent brands.At present,with the impact of new energy industry,it is facing industrial structure reform and has attracted much social attention.In this context,the problems faced by Lifan technology in the strategic transformation stage from traditional vehicle enterprises to new energy vehicle enterprises have typical characteristics of the industry and can represent the development of China’s independent automobile brands to a certain extent.Therefore,this thesis selects Lifan technology,which constituted a substantial breach of contract in March 2020.This thesis aims to analyze the measures taken by Lifan to prevent bond default,deeply analyze its implementation results,compare the differences with expectations,explore the causes of bond default,sort out the path of Lifan technology bond default,find out its problems in corporate governance and corporate operation,and further find out external regulators,governments and other bond market participants have problems in preventing bond default risk,clarify their respective positioning in preventing bond default risk,and put forward suggestions to improve the existing situation.In terms of the company,it helps Lifan technology recognize the future development direction of the automobile industry,make a rational long-term plan,and improve the awareness and ability to prevent bond default risk.At the same time,it also aims to help private automobile independent brands similar to Lifan technology learn lessons from it;In terms of credit rating agencies,by improving system,they can better play the role of "gatekeeper" in the securities market;On the government side,we will implement various relief policies for private companies and enhance the efficiency and effectiveness of relief funds.Therefore,through the efforts of all parties to jointly prevent the occurrence of bond default.This thesis mainly uses case analysis,literature analysis and comparative analysis to draw three conclusions: Lifan technology bond default is the result affected by internal and external factors,of which the unreasonable internal strategic transformation is the main reason;Liquidity crisis is the precursor of corporate bond default;The company’s own good foundation is the prerequisite for resolving risks.