Study On The Mode And Effect Of Market-Oriented Debt-Equity Swap In Private Enterprises

In recent years,China’s external environment has become increasingly complex.China is at a critical stage of transforming its economic development model.The macro economy faces downward pressure,and the leverage ratio of the non-financial corporate sector keeps rising.To improve the quality of economic development and deepen supply-side structural reform,China began to implement market-based debt-to-equity swaps in 2016.Compared with the previous round of policy-based debt-to-equity swaps,market-based debt-to-equity swaps aim to play the market’s function of allocating resources,help high-quality enterprises relieve debt pressure and achieve structural adjustment and industrial upgrading.With the advancement of practice and refinement of policies,more innovations have been made in the participants and operation mode of market-oriented debt-to-equity swap,and private enterprises have gradually joined in.In 2019,the National Development and Reform Commission issued the Key Points for Reducing Corporate Leverage Ratio in 2019,which clearly expressed support for private enterprises to participate in market-based debt-to-equity swaps.Taking private enterprises as the case study,the study of how private enterprises design reasonable debt-to-equity swap mode and the effect of implementing debt-to-equity swap is of positive significance for improving the participation of private enterprises in market-oriented debt-to-equity swap and promoting the development of private economy.This paper reviews the participation of private enterprises in market-oriented debt-to-equity swaps,selects Xinte Energy,a private enterprise in the new energy industry,as the research object,and explores how private enterprises effectively implement market-oriented debt-to-equity swaps and what results will be achieved.Firstly,it introduces the background of the market-based debt-equity swap of Xinte Energy.Secondly,it analyzes the motivation of Xinte Energy to choose the mode of paying debts by buying shares,explores the characteristics of the operation process,and analyzes the influence path of this mode on the enterprise.After that,financial index analysis,event study and EVA method are used to analyze the impact of debt-to-equity swap on enterprises,and the implementation effect of debt-to-equity swap is evaluated from the perspective of corporate governance and strategy.Based on the above analysis,this paper draws the following conclusions:(1)Although private enterprises are at a disadvantage in market-oriented debt-to-equity swap due to their own reasons and policy guidance,high-quality private enterprises can also effectively implement debt-to-equity swap.(2)There are many innovations in the operation of the debt-to-equity swap mode of Xinte Energy.Considering the establishment of a long-term debt-to-equity swap mechanism,shareholders’ equity protection,performance commitment and interest jump clauses are reasonably nested.(3)Market-based debt-to-equity swaps have played a positive role in improving the financial situation of enterprises,increasing the value of enterprises,optimizing the governance structure and strategic transformation.(4)Market-oriented debt-to-equity swap has certain limitations: there are risks in the operation process,it is difficult for implementing institutions to participate in major business decisions,and the improvement effect on corporate profitability is not obvious.On this basis,this paper puts forward some suggestions from the perspectives of private enterprises,implementing institutions and regulatory departments.