A Case Analysis Of The Default Of “11 CHAO RI Bond”

March 4, 2014, the Chao Ri Company announced that the "11 Chao Ri Bond" couldn’t pay off 89.8 million Yuan of interest originally scheduled for March 7, 2014, they could only pay 4 million Yuan, and the payment of interest ratio was only 4.5%. So far, the "11 Chao Ri Bond" intimated their default became the first default bonds in china, and also broke the “non-default” record of public offering bonds of china. But when the society positively reports and analysis the bond market’s first break of "rigid payment" and came to a pro-default era, the "11 Chao Ri Bond" paid back all principle and interest after defaulted. The "rigid payment" rules of Chinese bond market were still unbroken.Recent years, our country’s capital market has rapidly developed, and the stock of bond market has ranked third in the world. Though the stock is huge, there are still many problems. Defaults always appear in foreign developed bond market, but in China bond risk events can ultimately solve through games by each side. The implicit rules of “rigid payment" has a strong impact on the development of Chinese corporate bond. The “rigid payment” system of public offering bonds contorts the price of funds, obstructs the healthy, balanced development of bond market, as well adverse to the multilevel capital market construction. The “rigid payment" base on government credit impedes the development of credit derivatives represented by Credit Default Swap(CDS), it can seriously affects the role of the bond risk premium. Under the influence of “rigid payment" market players ignored the credit risks in order to obtain high profit.All though "11 Chao Ri Bond" end up by “rigid payment", it sounded the alarm for investors of bond market. We should realize that “rigid payment" of public bonds is not the constant form of our bond market, we need to pay attention to the risks after it. At the same time, “rigid payment" put forwards exacting requirements to Chinese superintendent of bond market. They should implement effective, reasonable measures, eliminate or decrease disadvantages that obstruct the healthy, balanced development of bond market.Through the exposition and analysis of "11 Chao Ri bond", this thesis reveals the implicit rules of “rigid payment" which has appeared in our country’s corporate bond market for a long time. The thesis analyzed the corporate bond market’s negative effects produced by those rules, referenced remedies that foreign mature capital market used to solve corporate bonds default events. At last, this thesis made some suggestions and countermeasures to our corporate bond market regulatory system and supervision.