Case Analysis Of Bond Default Of Brilliance Auto

In 2014,China’s bond market began to experience bond defaults.The "11 Chaori Bond" incident became the beginning of China’s bond defaults.Since then,"rigid cashing" has become a history,and the number and amount of bond defaults have grown rapidly.In recent years,China’s economy has faced downward pressure.At the same time,the outbreak of the new crown pneumonia epidemic in 2020 has accelerated the exposure of credit risks in the bond market.In 2020,high-credit state-owned enterprise bond defaults have occurred one after another,which has brought a huge impact on the bond market,and aroused widespread concern in the society.Among these default events,the Brilliance Auto bond default event is one of the most concerned events.As a large state-owned enterprise,Brilliance Auto has assets as high as190 billion yuan,but it was unable to pay its 1 billion yuan due debts as scheduled,and the company went bankrupt and reorganized soon after the default.Based on the above background,this thesis will take Brilliance Auto as the case study object,deeply analyze the reasons for the default exceeding market expectations,and on this basis,put forward suggestions on the applicability of promoting the healthy and stable development of China’s bond market.First,this thesis introduces the basic information of the case company,sorts out the development process of debt default,and introduces the economic consequences of bond default events.Then use case analysis,model construction and other methods to analyze the internal and external causes of Brilliance Auto’s bond default,and form support for the analysis conclusion through a combination of qualitative and quantitative methods.This thesis believes that the macroeconomic downturn,the tightening of the financing environment,the sluggish industry,the invalidation of implicit guarantees and the inflated credit rating are the external reasons for Brilliance Auto’s default;Profits relying on joint venture brands,weak self-owned brands,heavy debt burden,insufficient solvency,tight cash flow,declining refinancing ability,and insufficient control of the parent company are the internal reasons for Brilliance Auto’s default.This thesis uses the Z-score model and the PFM model for quantitative analysis,and finds that the Z-value of Brilliance Auto is lower than the warning value from 2015 to 2019,indicating that the company’s financial situation is worrying.In the part of the PFM model,this thesis selects companies that are the same as Brilliance Auto and have similar main businesses as sample companies for quantitative risk analysis.The results show that Brilliance Auto’s default risk is higher than the industry average.Finally,this thesis puts forward relevant suggestions from the four perspectives of bond issuers,investors,regulators and rating agencies.Advice to bond issuers,pay attention to the external environment,avoid excessive borrowing,attach importance to independent research and development,and master core technologies;Advice to investors,abandon belief in state-owned enterprises,treat ratings rationally,strengthen risk awareness,and improve professionalism;Advice to regulators,improve the information disclosure mechanism,improve the creditor protection mechanism;suggestions for rating agencies,improve the credit rating mechanism,and strengthen credit rating tracking.