Group Corporate Bond Default Analysis And Early Warning

Since 2018,defaults in China’s bond market have continued to deteriorate.Default principals are diversified,from small and medium-sized private enterprises to large group enterprises,even some state-owned group enterprises that are considered to be reputable by the market have also experienced the bond default events.The debt stock of group enterprises is large,and internal related party transactions are frequent,debt defaults are more likely to have knock-on effects,prompting the group to go bankrupt and reorganize.In addition,the default of the group’s bonds also has a plate effect,causing regional financing difficulties.The frequent occurrence of bond default events has negatively impacted on the stability of financial market.As the largest default principal in the first half of 2021,HNA Group’s outstanding debt exceeded700 billion yuan,which had a huge impact on the market and attracted the attention of all parties involved in the market.This thesis takes the bond default event of HNA Group as an example to analyze the default of the group’s bonds.First of all,this thesis sorted out the strategic expansion process and default timeline of HNA Group and combined with the development situation and industrial expansion of the group at that time.Taking HNA Group and its 8 domestic listed subsidiaries as the subject of the study,the causes of HNA Group’s bond default were analyzed from two aspects: external environmental impact and internal factors of the group.The study found that from the appearance,HNA Group’s bond default bankruptcy reorganization is based on the black swan event caused by the impact of the COVID-19 on the aviation industry in 2020,but the deeper reason is that HNA Group’s blind diversification expansion,large-scale debt financing and corporate governance failure have led to insufficient financial stability of the group.The group’s overall profitability and solvency are weak,and the low operational efficiency affects the stability of cash flow,which makes the liquidity of HNA Group exhausted,making it difficult to survive under the dual pressure of changes in the economic environment and the company’s own large amount of debt,then HNA Group declared bankruptcy reorganization.Secondly,this thesis analyzed the internal group credit risk transmission path,HNA Group conveys benefits through internal related party guarantees,internal asset or equity transfers,capital lending and productive related party transactions,so that credit risks continue to spread and accumulate within the group,resulting in a chain effect.Based on the above factor analysis,this thesis further analyzed the credit risk of HNA Group by means of Z-Score model,F-Score model and GARCH-KMV model of corrected parameters.The research results show that such classic risk management models can effectively warn the credit risk of HNA Group,and the model measurement results match the default risk points of HNA Group’s listed companies.Finally,this thesis put forward relevant suggestions on the prevention and early warning of group company bond defaults from the aspects of internal governance,strategic management,financial management and risk management.After comprehensively analyzing the causes and early warnings of HNA Group’s bond defaults,it proposes to build a credit risk default early warning mechanism for group enterprises,and divides the default factors of enterprises into macroeconomics,industry fluctuations,corporate governance and financial risks.In particular,in addition to the general financial elements,it also proposes early warning elements for the characteristics of the group enterprises,such as the group has a large number of virtual assets,the improper means of the group’s internal controllers,and a large number of related party transactions and illegal transactions,which have a certain negative impact on the financial stability of the group,which should be taken into account when analyzing the credit risk of the group enterprises and increase the accuracy of credit risk analysis.The conclusions of this case study provide certain reference significance for diversified group enterprises in credit risk prevention and early warning,which will help such enterprises to improve their ability to manage bond default risks.To some extent,it can promote the healthy development of the bond market.