Study On The Causes And Economic Consequences Of Neoglory Group’s Bond Default

On April 27,2018,the People’s Bank of China,China Banking and Insurance Regulatory Commission,China Securities Regulatory Commission and the State Administration of Foreign Exchange jointly issued the "Guiding Opinions on Regulating the Asset Management Business of Financial Institutions",referred to as the "New Regulation on Asset Management".New regulations on capital management were officially implemented in 2022.Since then,financial institutions are not allowed to promise to guarantee the principal and income,and they are not allowed to make capital payments even if there are payment difficulties.The "rigid payment" was officially broken,which greatly increased the payment pressure of enterprises.At the same time,the economic slowdown,the industry downturn,the impact of COVID-19 and other factors have increased the risk of corporate bond default.In this context,the default tide of Chinese enterprise bonds is becoming increasingly fierce,especially the default rate of private enterprises is very high,which is contrary to the general direction of the state to vigorously support the development of private enterprises and relieve the financing difficulties of private enterprises.Therefore,it is of far-reaching significance to deeply explore the reasons for private enterprise default and fully reveal the economic consequences of private enterprise default for the vigorous development of private enterprises,healthy and orderly capital market and steady development of national economy.Based on the above research background,this thesis selects the bond default of Neoglory group as a typical case of large private enterprises in default predicament.By using the literature research method,case analysis method and event research method,the collected materials and data are combined with vertical and horizontal comparison to make an in-depth analysis of the causes and consequences of bond default of Neoglory group.And summarize the relevant and instructive suggestions.First of all,the background and significance of the case study are briefly expounded,the relevant literature is reviewed from three aspects,and the research content,research methods and innovation points are introduced.Then,the concepts and theories involved in the article are briefly introduced.In the part of case introduction,the case enterprise and its bond default situation are sorted out;Then,according to the logic of first out and then in,it explores the reasons behind the bond default of Neoglory group.The economic consequences of bond default of Neoglory group are analyzed from three perspectives.Finally,according to the case analysis,the research conclusions are drawn and relevant suggestions are put forward.This thesis draws the following conclusions: First,the external environment pushes Neoglory group to the brink of bond default.The macroeconomic downturn,the tightening of refinancing environment,and the inflated and delayed rating increase the default risk of Neoglory group.Second,the root cause of bond default lies in the enterprise itself,the defects of corporate governance,the prominent risk of the actual controller,the 100 billion strategy brings performance pressure and cash flow pressure,the low benefit of improper investment,resulting in high financial risk,aggressive financing of debt pressure,resulting in cash flow exhaustion;Third,the economic consequences of the bond default of Sunlight Group are significant and extensive,which have a certain impact on the issuers,the bond market and investors.Based on this,this thesis puts forward the corresponding measures to prevent corporate bond default:(1)Pay attention to the external environment,scientific strategic planning;(2)Improve corporate governance and restrain managers’ overconfidence;(3)Optimize the layout of investment,rational and scientific investment;(4)Expand financing channels and optimize financing structure;(4)Improve the financial risk control system and strengthen risk control.