Research On Real Estate Bond Default Risk From The Perspective Of Cross-default

The bond market is an important part of China’s financial market,and the security of the bond market is an important topic concerned by enterprises and even the country.However,since 2014,the number of bond defaults in China has increased year by year,and the amount of defaults has also increased.Risk prevention in the bond market is the key to reducing systemic risks and maintaining the healthy operation of China’s financial market.The cross-default clause can affect the bond default risk to a certain extent.As a special restrictive clause,the purpose of cross-default clause is to put different bond investors in the same position of claim when an enterprise defaults on its debt,so as to protect the interests of creditors.However,the triggering of cross-default clause may aggravate the financial pressure of bond issuers,worsen the fundamentals of enterprises,and ultimately generate greater bond default risk.Bond investors will also suffer.Sorting out the existing literature,we find that most of the research on crossdefault clauses and bond default risk stays at the case level,and most of the theoretical research is also in the field of law.Considering the characteristics of high leverage operation in the real estate industry,and the increasing scale of real estate debt repayment,the risk of debt default is increasing.Therefore,this paper chooses bonds in the real estate industry to explore the impact of triggering cross-default clauses on debt default risk.This paper firstly introduces the protection mechanism of bond investors’ interests in our country from both internal and external aspects,and summarizes the institutional background,principle,legal compliance and difficulties in practical application of cross-default system.This paper first introduces the bond investor protection mechanism in our country from both internal and external aspects,and summarizes the institutional background,principle,legal compliance and difficulties in practical application of cross-default clause.Secondly,it uses the statistical analysis method to analyze the default situation of our country’s bond market,and analyzes the reasons of bond default from two perspectives of macro policy and corporate internal,and then makes a detailed analysis of the defaulted bonds of our country’s real estate industry from the nature of bond issuer,credit rating,regional distribution and other perspectives.Then combined with the impact of cross-default clauses on bond default risk,the research hypothesis and research design of this paper are put forward.In the empirical part,this paper selects the real estate industry bonds from 2016 to2021 as samples,takes the first appearance of cross-default clauses in the Prospectus as the time node,preconditions and tests the data,and conducts benchmark regression to obtain the impact of cross-default clauses on bond default risk.Finally,the conclusion is that the cross-default clause will significantly reduce the cash recovery rate of corporate net assets,which is manifested as higher bond default risk.Finally,the heterogeneity analysis is conducted from two aspects of the nature of bond issuer and bond maturity,and it is found that when the nature of the enterprise is state-owned,the cross-default clause will reduce the cash recovery rate of net assets and increase the risk of bond default.The conclusion of this paper provides a new way and path for the further refinement and improvement of cross-default clauses,and also provides empirical evidence for the improvement and use of cross-default clauses by regulators,bond issuers and bond investors.