The Credit Risk Study On SME Private Debt In China

For a long time, the indirect finance and direct finance is disproportion in our country. Enterprise financing structures based on indirect financing over relies on bank credit, so that the risk of macroeconomic fluctuation is highly fastened on banking system, and the financial system is lacking of flexibility. On direct financing structure, the stock takes a large scale, and the bond is too much small, while the situation is just on the contrary in the capital market of the developed country. In the long run, this unreasonable financing structure will be adjusted, and the bond has a big development space. In April 2012 the private placement bond of minor enterprises came into the eyes of our country, and people are paying more and more attention to it. This highly-yield bond is just a beginner, and because of the imperfection of the bond market, investment subject and interest rate structure, it’s launching is still in the exploratory stage. The low credit rating of issuing corporation and high interest rate make the private placement bond risky, so a large number of investor remain hesitant. Consequently, there are necessity and realistic meaning to study the measurement and prevention of credit risk in the new bond.Methods adopted in this article include: documentation, quantitative and qualitative analysis and comparative analysis. Research subject is the credit risk in the private placement bond of minor enterprises. First, introduce the conception and theory of research subject, contrast the difference between the private placement bond of minor enterprises and other financing method, and study the feature and origin of research subject. Second, expound the development status of the private placement bond of minor enterprises and high-yield bonds abroad, carry on the SWOT analysis to the private placement bond of minor enterprises, from which put forward the existing problems, and draw lessons from credit risk prevention of high-yield bonds abroad. Third, the correlation studies at home are almost about the qualitative analysis on the problems existing in the private placement bond, but rarely about the quantitative study on its credit risk. In order to promote the development of the private placement bond market, this article makes a systematic analysis on research subject both theory and demonstration, and sums up the existing bond credit risk measurement model at home and abroad. Based on referring the models abroad, and comparing the applicability of the different ones, this article builds the PFM measurement model for the private placement bond of minor enterprises at home, which has been used to do the empirical study on research subject and comes to the conclusion.The study shows that the distances to default of the private placement bond of minor enterprises which is calculated by the revised PFM model are all less than the results from the previous one. It reveals that the revised PFM model is more sensitive to the expected default probability of the issuing corporation. The small fund, high-tech, and environmental protection enterprises is always with high credit rating and low default rating, while the big fund, low level of technology, and low added value enterprises is just on the contrary. But there are some exceptions. If there are a large number of listed companies in the same industry of the issuing corporation, the revised PFM model is more sensitive to the risk identification, and its calculation will also be more accurate. To those high level asset-liability ratio issuing corporation, especially the high short-term liability ones, the issuance of long-term private placement bonds will optimize its financing structure, reduce the business risk and increase the operating efficiency.Last, aiming at the problems of the private placement bond of minor enterprises at home, referring the experiences and risk prevention and control mechanism of high-yield bonds abroad, this article offers proposal from the aspect of introducing effective credit derivatives, nurturing institutional investors, improving bond liquidity and the mechanism construction, standardizing market operation, appropriate regulation, and policy support.