Case Analysis Of Kangdexin Group Bond Default

In 2005,the introduction of unsecured short-term financing bonds that relied entirely on the issuer’s own credit to repay the credit bond market in China.In the past two years,enterprises have gradually entered into the debt repayment period,and the annual debt maturity has gradually increased.The first domestic public offering of bonds in 2014 broke the reality of rigid redemption,and the “11 Chaori Debt” experienced a substantial default,and the bond default trend has intensified since then.As of December 31,2019,179 credit bonds had material defaults during the year,which exceeded the default scale in 2018.From the perspective of the issuer,non-state-owned companies’ defaults became the absolute main force of defaults in the bond market that year,but they also spread to the defaults of central and local government enterprises.It can be seen that China’s debt default situation is still severe.From the perspective of bond defaulters,the main focus is on high-rated defaulters.The impact of corporate debt defaults is multifaceted,which not only increases the refinancing cost of the enterprise,affects the company’s ability to continue operations,but also affects the investor’s willingness and interest to invest.As China actively promotes supply-side structural reforms,the policy of capacity reduction has been continuously introduced,the credit risk of the bond market is increasing,and credit default incidents are constantly erupting.Among the defaulting companies in 2019,there have been defaults of emerging industry companies.They do not have serious overcapacity and acceptable operation,but bond defaults have occurred.This article selects Kangdexin Composite Materials Group Co.,Ltd.as the research object.The company was a leader in the polymer material industry before the breach of contract.It is an emerging industry enterprise and has an AAA main body rating.There has never been a default.Today,the two ultra-short-term financing bills and two medium-term bills issued by them have substantially defaulted,and the reasons for the defaults deserve our in-depth study.This article analyzes the default process and causes of Kangdexin’s new bonds from a macro perspective,an enterprise perspective,and audit and regulatory agencies.This study finds that macro factors include changes in the bond market,tightening financing policies,and industry patterns.Corporate factors include related party occupation of funds and illegal guarantees,high shareholder equity pledge rates,and corporate strategic deviations.Intermediaries and supervisory agencies,including audit institutions,dereliction of duty and the regulatory standards of the supervisory agencies are inconsistent,which eventually led to the occurrence of Kangdexin’s bond defaults.By analyzing this case,we summarize the suggestions on emerging industry companies to formulate appropriate development strategies,standardize corporate governance,strengthen the management of intermediaries and improve the market supervision mechanism,and promote the development of China’s emerging industry companies and the healthy development of bond market of China.