The Case Study On The Default Of State-owned Enterprises’ Credit Bonds

China’s bond market has developed for 40 years,and the market mechanism has become increasingly perfect.Therefore,issuing bonds for financing has become the first choice for many enterprises.However,the risk of bond default also swept along.After the first year of bond default in China was opened in 2014,the scale of bond default in China basically showed a trend of increasing year by year.Most of the defaulting enterprises were private enterprises,and the default probability of state-owned bonds was low.However,in 2020,under the dual influence of the COVID-19 epidemic and the economic downturn,there were frequent bond defaults of state-owned enterprises,and many state-owned enterprises with high credit ratings also had large-scale bond defaults,which caused a sensation in the whole bond market.Under this background,this paper selects Yongmei Group,a state-owned enterprise that still maintained a high credit rating before the bond default,as the case study object,and analyzes the reasons of its bond default in many ways,so as to provide enlightenment for state-owned enterprises to prevent bond default and promote the stable and healthy development of the bond market.In this paper,the macro-and micro-analysis method is used to analyze the current situation of credit bond default of non-financial institutions in China’s bond market.It is found that the default industries are still dominated by industries with strong periodicity and overcapacity,and the default rate of state-owned enterprises’ bonds is rising,so the credit rating system can’t provide an effective warning for the default of state-owned enterprises’ bonds.Secondly,this paper selects Yongmei Group as the research case,and combs the bond default event from the aspects of the brief introduction of the default subject,the review of the default process and the subsequent disposal of the default.On this basis,from the perspective of Yongmei Group,it is found that the fundamental reason for this bond default is the blind strategic expansion of the enterprise and the huge internal control defects.The enterprise’s debt structure is unreasonable,its solvency continues to decline,and its hematopoietic capacity continues to weaken.The influence of various factors keeps accumulating,which eventually leads to the break of enterprise capital chain and financial distress.Finally,based on the root cause of the bond default of Yongmei Group,this paper summarizes the corresponding enlightenment for the future issuers,especially the state-owned enterprises,to prevent the risk of bond default and resolve the crisis of bond default.In terms of preventing the risk of bond default,enterprises should adjust their strategies in a timely manner,strengthen the fund management system,improve the internal audit system,adjust their capital structure and debt structure in a timely manner,and disclose information truthfully.After a material bond default occurs,the enterprise can take the following countermeasures: actively raise funds to repay the debt;Negotiating with creditors to renew the bonds;Making debt-to-equity swap plan to reduce debt-paying burden.For state-owned enterprises,when dealing with the risk of bond default,they should perfect the information disclosure boundary;Seeking government help rationally;Introducing bond investors as needed.