A Study On The Causes And Economic Consequences Of Bond Defaults Of Private Listed Companies

As an important channel of external financing for enterprises,the bond market is playing an increasingly prominent role in supporting national economic and social development,and has now become an integral part of the capital market.However,as the scale of debt issuance in the bond market continues to expand,bond defaults are intensifying and normalizing.According to Wind information statistics,in 2021,the global bond default amounted to $ 375.354 billion,of which,China’s bond default amounted to 158.367 billion,from the defaulted subject’s industry,real estate development enterprises accounted for the highest;from the defaulted subject’s enterprise nature,private enterprises accounted for the highest.Moreover,the proportion of bond defaults by private enterprises is getting larger and larger among listed companies.Compared with state-owned enterprises,the impact of bond defaults on private listed companies is more serious,causing economic consequences such as increased financing and refinancing costs,increased capital market risks,and damage to investors’ rights and interests.Therefore,it is an urgent problem to analyze the causes and economic consequences of bond defaults of private listed companies,explore the response strategies to prevent bond defaults,and improve the current situation of financing difficulties of private enterprises.Based on the above background,this paper selects private listed companies as the research object.Firstly,the causes and economic consequences of corporate bond defaults are sorted out on the basis of existing literature.Secondly,based on the analysis of the current situation of bond defaults of private listed companies,China Fortune Land Development CO.,LTD is selected as a case study to briefly introduce the financial status of the defaulting subject before the default and the bond issuance,and to review the default process and the subsequent disposal of the case company.After that,a combination of qualitative and quantitative methods is used to conduct an in-depth analysis of the reasons for the company’s bond default,supplemented by supporting evidence for the financial risk.It is concluded that in terms of external causes,there are mainly reasons of macroeconomic downturn,financial policy regulation and industry environment impact,and in terms of internal causes,there are reasons such as unreasonable business model,over-indebtedness and aggressive expansion strategy.Finally,using the economic consequences caused by CFLD bond default,the following reasonable suggestions are made for the above reasons:(1)External regulators can improve the supervision level in terms of strengthening supervisory responsibilities,improving credit rating mechanism and constructing legalized market-based default disposal mechanism.(2)Bond issuers can prevent bond defaults by paying attention to changes in market and industry trends,formulating reasonable development strategies,planning financing structures reasonably,and establishing early warning mechanisms for financial risks.(3)Bondholders can protect their legitimate rights and interests from being violated by changing their original concepts,facing bond defaults squarely,establishing rational investment concepts,and thus improving their investment risk awareness.