Analysis Of Oceanwide Holdings Co.Ltd’s Bond Defaults

Due to the many advantages of bond financing,the number of companies choosing to obtain financing by issuing bonds is increasing day by day.However,since the first defaulted bond appeared in 2014,various types of bond defaults have emerged in China’s bond market,including those of major corporate groups.The existence of frequent business transactions and financing networks within conglomerates,while helpful in helping enterprises to leverage their scale,also provides a channel for the contagion of default risks.Therefore,it is important to study the generation and transmission of bond default risk within an enterprise group.Based on this,this paper takes Oceanwide Holdings Co.,Ltd.as the research object to explore the formation,contagion and impact of its bond default risk from the perspectives of both operational risk and risk contagion.Firstly,this paper compares the relevant literature and theoretical foundations and defines the relevant concepts.Secondly,this paper introduces Oceanwide Holdings Co.,Ltd.and the default situation,and from the perspective of operational risk,finds that its credit risk is mainly due to external reasons such as the impact of the new crown epidemic and tightening regulatory policies,and internal factors such as aggressive business expansion,insufficient profitability,unreasonable debt structure and disorganised internal governance,resulting in restricted financing channels,reduced solvency and increased financial risk.From the perspective of risk contagion and a review of the process of corporate risk contagion,it is found that intra-company activities,including connected transactions,connected guarantees and capital borrowing,provide a channel for credit risk contagion,with connected guarantees having the most serious impact.The contagion of credit risk also leads to a decline in market confidence in the firm and a forced reduction in the size of the firm’s assets.Finally,the paper suggests that enterprises should choose development strategies and financing strategies that are in line with the macro environment and their actual situation,pay attention to the risk of equity pledges,strengthen the management of intra-group connected transactions,and improve their information disclosure.Regulators should also improve relevant laws and regulations,increase supervision of intra-group connected transactions,help enterprises explore more flexible and diversified financing channels,and improve information disclosure rules and credit evaluation systems to prevent the creation and spread of credit risk.