Case Study On Bond Default Of Bohai Leasing

Bonds,as the main tool for social investment and financing in China,have gradually become the second largest financing channel in the market after bank credit.China’s bond market has been accompanied by rigid cashing for a long time.It was not until the default of "11 ultra Japanese bonds" in 2014 that the myth of no default in the bond market was broken.Subsequently,the number and scope of default subjects continued to expand.The outbreak of the COVID-19 in 2020 made the global economy,which was already in a downward cycle,even worse,especially the global air transport industry,a nearly devastating blow.Bohai Leasing is the second largest aircraft leasing enterprise in the world,with assets of 248.2 billion yuan but unable to repay the principal and interest of 475 million yuan of bonds,which constitutes a material breach of contract after multiple unsuccessful extensions.Therefore,selecting the default case of Bohai leasing bonds for in-depth analysis has certain typicality and practical significance.The paper first introduces the business structure,equity structure,bond financing situation,and bond default process of Bohai Leasing;Next,starting from the deterioration of its financial situation,analyze the reasons for its default from industry factors,business management,and risk contagion factors within the group;Finally,the KMV model was used to measure its credit risk level.Through research,it has been found that the direct reason for the default of Bohai Leasing Bonds is that its aircraft leasing main business has suffered continuous losses under a series of external factors,leading to the depletion of the company’s liquidity.But before its risk exposure,it experienced two stages: risk accumulation caused by its own poor management and risk contagion caused by the bankruptcy of major shareholders.Firstly,Bohai Leasing has accumulated a large amount of debt in its transformation to a financial holding group,and when the company experiences losses,it also faces concentrated debt repayment,which hinders its external financing channels.Secondly,the bankruptcy of the major shareholder,Navigation Group,has affected the company’s profits and stock prices through related party purchases and sales,as well as equity pledges,resulting in obstacles to its internal financing channels and a breakdown of its funding chain.The KMV model was used to calculate the default probability of Bohai Leasing,and the results showed that the default probability distance was continuously narrowing,further verifying that the occurrence of default events in Bohai Leasing was not accidental.Through case analysis,the following suggestions are proposed: enterprises should do a good job in asset management,increase the proportion of current assets,strengthen cash management,and ensure reasonable and sufficient liquidity to cope with the impact of emergencies;Subsidiaries within the group should strengthen independent management to avoid the spread of credit risks within the group;At the same time,we should have a correct judgment on the business cycle and industry development,and establish a risk warning and management system.As investors,we need to continuously learn investment knowledge and improve our risk identification ability;Reasonably understand the risks of group enterprises and pay attention to diversified investment;Pay attention to information disclosure,explore the connotation of information,and pay attention to industry trends to avoid investment risks.