Research On The Causes And Countermeasures Of Bond Default

In recent years,under the dual effects of policy support and gradual easing of monetary environment,China’s bond market has developed steadily and enter on a new stage,and has turn out to be the 2nd biggest bond market.With the default of the first bond "11 super day bond" in 2014 and the quit of the era of "rigid cashing",and now the default threat of many businesses with a quantity of a hundred billion is frequent,China’s savings bond default has entered the normalization stage.This paper selects Founder Group as the research object,This first case of AAA grade school enterprise default has aroused great concern in the market and broke the last "school enterprise belief" of investors,Therefore,it is of good importance for the bond market to find out about the motives of bond default and countermeasures of Founder group.This paper uses many methods to reviews the bond default events of Founder Group,analyzes the causes of its default,and puts forward the corresponding countermeasures.Firstly,the reasons of Founder Group’s breach of contract can be summarized as endogenous elements and exogenous factors.According to the common sense of significance and subordination,this paper divides the endogenous factors into 4 aspects: company governance,improvement strategy,profitability and solvency.it is the core factor causing the bond default of Founder group.Secondly,this paper analyzes the exogenous factors and finds that the macroeconomic downturn,the difficulty of external supervision and coordination,the excessive competition of rating agencies and the false and high rating all promote the occurrence of Founder group’s bond default.Finally,the paper put forward countermeasures for Founder Group from bond issuers,regulators and rating agencies.For bond issuers,they should end the chaos of internal governance,focus on their core business,and take care the financing risk caused by high debt.For regulators,they should solve the defects of multi head supervision,improve market operation efficiency,information disclosure and investor education.For rating agencies,they should maintain independence and take care the issuer’s own solvency and profitability.