Research On Causes Of Default And Risk Prediction Of Kaidi Eco’s Bonds

China’s economic growth is slowing down,and the adjustment of industrial structure has brought operational pressure to many enterprises.Bond market is an important place for enterprises to conduct direct financing.Since the default event of “11 Chaori” occurred in 2014,credit risks began to break out and default events occurred frequently.Based on this background,this paper adopts the method of case study,taking Kaidi Eco as an example,to study the causes of bond default and risk prediction.Firstly,this paper analyzes the causes of default of Kaidi Eco’s bonds from three aspects: macro,industry and company.Then,this paper uses the yield to maturity to test the ability of risk prediction of investors,uses ZETA model to examine the effectiveness of credit ratings,and uses KMV model to predict the risk of default more accurately,so as to establish a comprehensive default risk prediction framework.Finally,this paper puts forward suggestions to prevent risk of bond default and strengthen ability of risk prediction from the perspective of legislative organs,regulators and investors.The main conclusions of this paper are as follows: First,the causes of bond default are macroeconomic downturn,policy tightening,fierce industry competition,blind aggressive corporate strategy and deterioration of corporate operations.Second,when observing financial indicators,solvency indicators are the focus of attention.When the current ratio and assetliability ratio deteriorate,it often indicates that the risk of bond default begins to increase.Third,the ability of investors to predict the risk of bond default is weak,and the ability of rating agencies to provide early warning information is insufficient,so investors need to learn how to predict the risk of default.Fourth,"rigid payment" has become a thing of the past,investors must correct their investment attitude,conduct systematic study of financial knowledge,and enhance the awareness of risk management.