Analysis On The Causes Of Default Of Kangde's New Bonds And Research On Prevention

China is in a special period of economic transformation and is constantly facing downward pressure from the economy.In 2014,China’s first "11-Surplus Sun Debt"bond default case has occurred.By the end of 2019,there have been frequent cases of bond defaults and the number of default companies that have increased substantially,coupled with the new asset management draft issued by China in 2018,which clearly states that the government will break rigid payment.It is the release of this regulation that has brought new challenges to the main body of the company and its investors,and it has significantly exposed China’s bond market to credit risk.This article takes Kangdexin,the first bond defaulting company in 2019 as an example,which combs and summarizes the literature on bond default risk,causes of default and default risk prevention by foreign and domestic scholars,and analyzes Kangdexin’s based on overall characteristics of bond defaults of China’s listed companies.Measures should be taken to prevent default risks based on causes.The main body of this article is the analysis part of the case company.First,it summarizes Kangdexin’s company information and operating status,and then sorts out the process of Kangdexin’s successive defaults from debt issuance to substantive breach.Secondly,from the perspective of the company,the company’s stock market and external investors,it explains the adverse economic consequences caused by bond defaults.Then,analyzing the reasons for Kangdexin’s bond default.From the economic downturn,the fierce competition in the polymer industry,the regulatory agencies and third-party ratings and audit institutions are not responsible enough,to the deterioration of important financial indicators,the failure of internal control and early warning,asset freezing and high equity pledge rates,and excessively aggressive expansion strategies,etc.Finally,according to the influencing factors that induce Kangdexin’s new substantial defaults,it puts forward universal preventive measures against bond default risks.From improving the regulatory agency,third-party rating and auditing mechanism,to the improvement of the default risk early warning system,the rational development of investment and bond issuance development strategies,and the compliant disclosure of financial information.This article is divided into the following seven parts:The first part is the introduction.Firstly,the research background and significance of this article are clarified.Then,the research views of foreign and domestic scholars on bond default risk,the causes of default and the prevention of default risk are summarized.Research methods and innovations are also included.The second part is related concepts and theoretical basis.This part elaborates the related concepts mainly involved in this article,including three parts:bond,bond default and bond default risk,and discusses the theoretical basis of this article.The third part is the background description of Kangdexin’s bond defaults.The research in this part is mainly to pave the way for the following research.First,a general analysis of the bond defaults of China’s listed companies,mainly to explain the development status of the bond market of China’s listed companies and the current status of bond defaults,followed by the core part of this chapter,which briefly states the basic situation of Kangdexin and reviews the course of events.The fourth part analyzes the adverse consequences of Kangdexin’s bond default.They explain the adverse economic consequences of the company itself,the company’s stock market and investors,respectively.The fifth part analyzes the cause of Kangdexin’s bond default.This analysis part is the focus of this article.From the external factors of the company,such as the macro and industry environment and regulatory,rating and auditing institutions,to the internal factors of the company,to analyze the cause of the bond default of Kangdexin.The sixth part is the prevention of bond default risk from Kangdexin’s incident.,from the external perspective of the company,the regulatory agencies,third-party rating and auditing agencies to bond issuers respectively to provide the corresponding prevention recommendations for the risk of bond defaults.The seventh part is conclusions and prospects,which summarize the discussion of this article.It puts forward the research conclusion of this article and anticipates the future,providing reference for other companies.The innovation of this article is that Kangdexin has suffered a substantial default in January.Not only is it the first company in China that has a default in 2019,but the reason for its default is the fraud of its internal control failure,financial information disclosure and the high equity pledge rate.In addition,the financial distress caused by the company’s major reorganization failure and the lack of liquidity caused by the main account bank’s frozen assets have led to bond defaults.This was significantly different from most of the defaults caused by improper operations or overcapacity in previous years.So it has certain typicality and reference significance.Moreover,in the context of the previous policy environment,most of the scholars’ research focused on state-owned corporate bonds,there were relatively little research on the credit risk of private company bonds defaulted.A specific typical private company bond default was studied at the time when bond default events occurred frequently.The analysis and prevention of the causes of risks are very meaningful.In addition,most domestic companies conduct research on defaulted bonds are in traditional industries such as commerce and trade,building materials and steel,few case studies are on emerging manufacturing.Kangdexin is a high-tech materials company and a typical emerging manufacturing company.Therefore,choosing Kangdexin as a case company is innovative in its research object.This article analyzes the external and internal causes of bond defaults of Kangdexin and gives recommendations on the universal prevention of bond default risks,hoping to help to promote the healthy development of the Chinese bond market.