Research On Market-oriented Debt-to-Equity Swap Of SN Group Company Limited

Under the background of our country commercial bank non-performing loans and bad loans show an increasing trend,and banks are under pressure of disposing of large amounts of non-performing assets,after 1999,one of debt-to-equity swap as a tool appears on the market again.Market-oriented debt-for-equity swap is an important measure of the State Council to cooperate with supply-side structural reforms.In order to avoid financial crisis,maintain steady economic development and prevent systemic financial risks,the state decided to adopt a comprehensive measure of debt-to-equity swaps.In 2016,our country proposed a method of the debts into shares to reduce leverage again.The debt-to-equity swap emphasized market-oriented,following the will and principle of the market subject and set the price.It is decided whether to transfer shares by the main body.Different from the government-led debt-to-equity swap that was implemented for the first time in China,the implementation of policy debt-to-equity swaps has broadened the company’s financing channels and resolved the debt crisis,but it has not fundamentally solved the problems existing in the internal governance of state-owned enterprises.The theory of market-oriented debt-equity swaps in China is less,and the practical experience is even more scarce.It is significant to enrich and perfect the market-based debt-to-equity swap system.In the paper,SN group is selected as the case study object.First of all,foreign literature are studied on debt-to-equity swaps,the first study on the implementation of debt-for-equity swaps summarized in China,by comparing the differences in the implementation background and conditions of the two debt-to-equity swaps,highlighted the characteristics of the new round of market-oriented debt-to-equity swaps.Secondly,outlined the background of the case,the macroeconomic environment and policy guidance,the industry and the basic situation of the subject.Describe the debt-equity conversion plan signed by the case company,and analyze the causes of debt-for-equity swaps.Third,from the financial perspective,this paper analyzes the effects of the implementation of debt-to-equity swaps and the risks that may occur during the implementation process,and put forward prevention and control suggestions for risks.Finally,the research case draws a conclusion.The implementation of market-oriented debt-to-equity swaps can help companies optimize capital structure,the governance structure is improved,the financial crisis is alleviated,the debt service pressure is reduced,and enable companies to have long-term and stable financial support,accelerating the promotion of industrial structure upgrading,promoting the rapid transformation of enterprises,sustainable development in new energy or other markets.After an in-depth study of this round of market-oriented debt-to-equity swaps,this paper argues that this debt-to-equity swap has a significant effect on reducing corporate excessive leverage,defusing the bank’s financial risks,reducing creditors’ financial risks.The main participants of the debt-for-equity swap have achieved the purpose.The current round of debt-to-equity swaps fully played the role of the market.Banks as both participants and implementing agencies jointly supervised corporate operations and increased the efficiency of debt-to-equity swaps.The measure could solve the problem of soaring credit risks faced by companies and have a positive impact on financial markets.