Research On The Paths And Countermeasures Of Biased Use Of Rating Discretion In Bond Default

Due to the long-term expectation of "rigid redemption" in my country’s bond market,the first default event did not occur until 2014.With the steady progress of my country’s supply-side reform and the continuous implementation of de-capacity and deleveraging policies,market risks were gradually exposed.Market defaults have entered a stage of normalization.In this context,on November 10,2020,Yongcheng Coal and Electricity Holding Group Co.,Ltd.announced that due to tight liquidity,"20 Yongmei SCP003" failed to repay the principal and interest in full and on schedule,which constituted a substantial breach of contract.The default principal and interest amount totaled 1.032 billion yuan.The rising default rate of high-rated bonds has also sounded the alarm for the bond market.Generally speaking,rating discretion is usually in the hands of rating agencies,but issuers will use various channels to obtain a high rating.This paper will take the issuer as the main research object,and explore the impact of the issuer’s selective reporting on the biased rating results,that is,how the issuer bypasses the system through selective reporting and obtains a high rating.This paper adopts case analysis method,comparative analysis method and quantitative analysis method to introduce the process of Yongcheng Coal and Electricity’s default,and deeply analyzes its biased use of rating discretion in the process of default,and finally draws a conclusion.revelation.First of all,the paper explains the background and research significance of the paper,and on the basis of reading and sorting out domestic and foreign literature,the research content and research methods of this paper are put forward,and some concepts and concepts in the innovation of bond default system are introduced.Secondly,it analyzes the motivation of the biased use of my country’s rating discretion.Thirdly,after introducing the relevant background of Yongcheng Coal and Electricity,the process of default events and the disposal results,this paper studies the biased use of rating discretion by Yongcheng Coal and Electricity in the issuance and existence of bonds;The research on countermeasures of biased use of rating discretion mainly puts forward relevant countermeasures from the perspectives of rating agencies and issuers.In terms of rating agencies,in view of the one-sided rating standard model,the excessive weight of corporate background and financial data;insufficient research and risk disclosure of abnormal events;rating reference data only passive selective reports,lack of due diligence and other paths,proposed strict Bond rating market access qualifications,establish an exit mechanism;specify the standards for double rating and re-rating,innovate payment models;optimize governance structure,enhance independence and other corresponding countermeasures.In terms of issuers,in order to conceal major related transactions;weaken the relationship between debt and subject information,and create the illusion of stable business and financial stability,it is proposed to reduce institutional preferential treatment for AAA-rated companies and relax bond financing restrictions on companies with weak ratings;increase related parties Rules for detailed disclosure of transactions;clarifying the responsible subjects of information disclosure violations,and improving penalties and other countermeasures and suggestions.