Case Study Of Auto Bond Default In Brilliance

Since the 21 st century,with the rapid development of economy,the financing demand of Chinese enterprises has increased.Under the support and guidance of the state,more and more enterprises begin to use the way of issuing bonds for direct financing,which makes the overall issuance scale of the bond market continue to grow.However,in recent years,with the arrival of the new economic normal,the economic growth has slowed down and the industrial structure has been significantly adjusted.Since the first bond default in the bond market in 2014,the rigid cashing began to break,and the number and balance of defaulted bonds have increased year by year.From 2015 to 2016,due to the reduction of economic growth,overcapacity enterprises frequently defaulted;From 2017 to 2019,there was a wave of default by private enterprises,which was mainly due to the fluctuation of the economic cycle,and private enterprises were vulnerable to the economic environment and financing capacity;Since 2020,the number and amount of defaults of China’s state-owned enterprises have increased significantly,the risk of default has increased significantly,the beliefs of state-owned enterprises and AAA have been impacted,and creditors have suffered heavy losses.Due to the frequent defaults of private enterprise bonds in the past few years,in this process,investors believe that state-owned enterprises have the government’s bottom and guarantee because of the existence of state-owned enterprise belief,and the rigid cashing of state-owned enterprises has not been broken,resulting in the concentration of capital to state-owned enterprises,thus accumulating a lot of risks.Therefore,it is of great significance to fully study a typical case of bond default of state-owned enterprises.Firstly,this paper reviews and combs the literature at home and abroad from three perspectives: the causes of bond default,default disposal and risk prevention.On this basis,this paper selects brilliance automobile group as the object of case study,expounds and analyzes its bond default events in detail,including the general situation of automobile manufacturing industry,enterprise background,bond default process and subsequent development of default,and deeply analyzes its bond default motivation and impact on all parties by using credit risk theory,information asymmetry theory,term matching theory and Z-score Model.The study found that:from the perspective of external factors,in the economic downturn,including the COVID-19,the operating situation of brilliance group tends to deteriorate.In addition,due to the vigorous promotion of new energy vehicles,brilliance group has not caught up with the development boom of the times,and has been squeezed into a greater extent to occupy the market share.For a long time,the existence of implicit guarantee of state-owned enterprises,the imperfection of credit rating system and the lack of regulatory role have increased.The debt risk of brilliance group is accumulating.From the perspective of internal factors,brilliance group itself has great debt repayment pressure due to its serious debt repayment phenomenon and high proportion of short-term debt.Although from the perspective of consolidated statements,brilliance Automobile Group has a surplus every year,and its book current assets can fully cover current liabilities,its profits are extremely dependent on brilliance BMW,which is 50% controlled by its subsidiary Brilliance China.Its own brand is negligent in innovation and technology improvement,resulting in losses for years,This led to a thunderstorm in bonds and finally to the road of bankruptcy and reorganization.This event also had a great impact on the enterprise itself,other enterprises,bond investors and the market.Through in-depth study of the causes and effects of bond default of brilliance automobile group and the loopholes shown by the suspected "debt evasion",this paper believes that the risk of bond default of state-owned enterprises should be prevented from five aspects: optimizing the debt structure of enterprises,improving the innovation ability of state-owned enterprises,improving the credit rating system,improving supervision and restricting the implicit guarantee of the government,It provides enlightenment and suggestions for the healthy development of other state-owned enterprises and the prevention of bond default risk.