Research On The Implementation Process And Effect Of Market-oriented Debt-to-equity

At present,China’s economic development has entered a new normal,transformed from high-speed development to high-quality development.However,the debt scale of many Chinese enterprises is increasing,and the leverage ratio is gradually increasing,which makes many enterprises are faced with financial difficulties or even operational difficulties.In addition,in recent years,the international economy has been sluggish,and the profitability of many enterprises has been declining.Under the background of economic downward pressure,deleveraging has become one of the key points of supply-side structural reform.With the release of the Guidance on debt-to-equity Conversion of market-oriented banks in 2016,it marks the beginning of a new round of debt-to-equity conversion in the Chinese market.At the same time,the guideline put forward guidance for deleveraging,that is,to reduce the leverage ratio and debt level through market-based debt-for-equity swaps.In this context,in 2019,Western Construction and Jian Xin Investment launched to sign a debt transfer agreement.Therefore,this thesis firstly summarizes the research on debt-to-equity swaps by domestic and foreign scholars and the relevant results.Then,it summarizes the development process and specific implementation of debt-to-equity swaps since the implementation of the new round of market-oriented debt-to-equity swaps.Finally,it takes the construction of the west as a case study.It mainly discusses the implementation motivation,specific implementation process and final implementation effect of the market-oriented debt-to-equity swap.It is found that the implementation motivation of the market-oriented debt-to-equity swap is mainly to relieve the debt pressure of the company and repay the maturing debt.In the process of implementation,based on the actual situation of the construction of the western region,it fully follows the principle of marketization in terms of participants,pricing mechanism and exit methods,and also takes into account the interests of investors.In terms of implementation effect,the debt-to-equity swap carried out by Western Construction has brought positive market response to the company.Meanwhile,its financial performance has also improved to some extent,and the company’s ownership structure and governance structure have been optimized,making the company’s ownership structure more abundant.However,in this process,due to information asymmetry and other reasons,it is inevitable to appear market risks,business risks and so on,which requires the company to take corresponding risk avoidance measures to prevent.At the same time,the effect of market-oriented debt-equity swap cannot be achieved overnight,and the company needs to continuously improve its operation and management to achieve long-term development.Finally,this thesis summarizes the implementation of the western Construction of the debt-equity swap and draws the conclusion of this thesis.