Case Study Of Bond Default Of Sichuan Blue-ray Development Corporation

With the implementation of the "three red lines" policy and the real estate loan concentration management system on January 1,2021,the financing policy of the real estate industry become more tighten.In this context,the bond default risk of the real estate industry presents a new feature.the default risk begins to spread from small-sized and medium-sized real estate enterprises to large real estate enterprises.Bond defaults happened to the large real estate enterprises whose sales volume exceed more than 100 billion,such as Taihe,Huaxiaxingfu and Blue ray development corporation.The main business of the blue-ray development corporation is concentrated,the project area of the blue-ray development corporation is scattered and the project turnover speed is fast.These operating level characteristics are different from those in defaulting real estate enterprises in the past.But unfortunately,the bond default of the blue-ray development corporation still occurs.Moreover,the occurrence of this default event has had a greater negative impact on the stock price and long-term continuous operation of Blu-ray Development Stocks,which has seriously damaged the interests of bond investors.Therefore,it is necessary to analyze the causes of the case and put forward corresponding preventive improvement suggestions.This case analyzes the reason why blue-ray development corporation has defaulted on its bonds in two parts,which contain the external environment and the internal business model.This case believes that using the high turnover mode will increase the Bond default probability under the adverse external environment.On the one hand,using high turnover mode will improve the company’s leverage,form a radical expansion strategy,push up the project cost,reduce the profit space of the project,and easily cause problems such as tight capital chain and difficult asset disposal.On the other hand,the epidemic has a negative impact on the company’s product sales.The tightening of financing policies hinders the company from replenishing cash flow.Adverse changes in the external environment will hinder the normal operation of the company’s high turnover model,make capital turnover difficult and lead to bond default.Finally,this paper puts forward corresponding improvement suggestions according to previous analysis.These suggestions including that firstly,the real estate enterprises should implement a business model combining high-cycle transformation and profit-making to cope with the changes of the external environment,carry out financial flexible management,and improve the adaptability of enterprises under environmental changes.Secondly,investors should pay attention to the matching degree between the business model of real estate enterprises and the external environment before investment.And investors should pay attention to the negative behavior of real estate enterprises in sensitive periods after investment.Finally,regulators should appropriately extend the buffer period of policies,improve the bond default disposal mechanism,and assist the real estate market to pass the policy transformation period smoothly.The real estate industry is not only important to China’s economic development,but also important to the stability of the National People’s livelihood.The fourteenth five-year plan clearly states that we should adhere to the basic principle of not speculation in real estate and implementing policies according to the city.This means that the future policies of the real estate industry will still maintain cautious.Therefore,in this situation,exploring the causes of bond default of real estate enterprises operating in high turnover mode,and putting forward corresponding improvement suggestions,will help to reduce the occurrence of bond default of real estate enterprises in high turnover mode under the adverse external environment and maintain the steady operation of the real estate market.