Research On The Causes And Countermeasures Of Credit Debt Defaults Of "AAA" Highly Rated State-owned Enterprises

The "11 Chaori Bond" in 2014 is the beginning of bond defaults,breaking the inherent "rigid payment" rule in Chinese bond market.In recent years,as the scale of Chinese bond market continues to expand,the probability of bond defaults which becomes a concern in Chinese capital market has increased significantly.At the same time,according to the statistics of new defaulting subjects in 2020,a new situation of more defaulted bonds of highly rated state-owned enterprises(SOEs)was found.Therefore,taking into account the characteristics of the new defaulting entities in 2020,this paper selects Brilliance Auto,a"AAA" high-rated state-owned enterprise with bond defaults,as a case study.The purpose of this paper is to summarise the causes of bond defaults of highly rated SOEs and to provide suggestions for reducing defaults of them.The mainly methods used are literature analysis,statistical analysis,case study analysis and comparative analysis.Firstly,the literature analysis method is used to explain the key terms and theoretical foundations of this paper and to conclude previous experience.Then it analyses the statistics of historical and current Chinese bond market,and outlines the causes of bond defaults occurring in highly rated SOEs.In addition,the case analysis method is applied to introduce the case as a whole,and to analyse the causes of defaults from the following aspects:from the macro level,it analyses the impact of the general economic environment,relevant policies and systems,as well as the unique beliefs of SOEs and invisible guarantees on the default of bonds of highly rated SOEs;from the industry level,by observing the prosperity and the characteristics of automobile industry,it sums up the relevant causes;from the company level,it focuses on the analysis of the strategic,governance and financial aspects of the company,utilizing the comparative analysis method to compare with enterprises in the same industry and finally derive the unique element leading to bond defaults.This paper proposes corresponding strategies from the perspectives of issuing entities,rating agencies,government and investors respectively:highly rated SOEs need to be proactive and innovative,keeping an eye on their financial situation and choosing the right growth strategy;rating agencies need improving their standards and abandoning their belief in SOEs;investors need to concern about the invested companies and macroeconomic changes.The significance of this paper is to explore the causes of bond defaults by highly rated SOEs and to guide the development of more scientific and reasonable business strategies,while suggesting that the government should step up supervision,urging credit rating agencies to further improve their rating standards and raising awareness of investors on bond defaults.