A Case Analysis Of The Default Of "11 CHAO RI Bond"

The declaration of the default of "11 CHAO RI Bond" on March 7,2014 open the Pandora’s box of the credit risk in our bond market,in less than two years after the default of "11 CHAO RI Bond", there were 15 events of default in bond market happened and eight of the bond were still not completed paid until March 2016.Although the principal and interest of "11 CHAO RI Bond" were full redemption,cause it can not be the first bonds of breaking the rigid honor invisible rules,but it left a deep influence in bond market.After the default of "11 CHAO RI Bond",the bond market starts to enter the default era.Our bond market started from 1980s,and after years of exploration and development, there has achieved obvious achievements in market expansion, production, trading mechanism perfection and constraint mechanism. However, compared with the growing size of the market, the main market subjects behave lagging behind on the ability of credit risk control,and the frequent occurrence of bond default in our market since 2014 is a good example. Therefore, how to effectively prevent and manage credit risk,and promote the healthy and orderly development of the bond market is becoming the concerned issue of each market subject.The article is divided into five parts in the structure,its main content is as follow.The first part is the introduction of the article. This part introduce the bond background before the default of "11 CHAO RI Bond" firstly, and then interpret the meaning of the "11 CHAO RI Bond"to the multidimensional credit risk prevention system’s building. After these, based on the summarizes the research status of credit risk prevention system at home and abroad,the rest of this part introduces the framework, characteristic and deficiencies of this paper.The second part of the article is the review of "11 CHAO RI Bond" credit event.This part introduced the market position, sales model and product model of CHAO RI company firstly and also said the reasons of the issue of "11 CHAO RI Bond". Then, this part in accordance with the first phase of the interest payment difficult, the second phase of the interest payment default and be reshuffled by "JIANG SU XIE XIN ", such a time sequence to introduce the "11 CHAO RI Bond" credit event.The third part of the article is about the reasons that caused the default of "11 CHAO RI Bond", it is the core part of article. This part mainly from six aspects to discuss the reasons that cause the default of "11 CHAO RI Bond". First is the analysis of CHAO RI company, including the deterioration of the financial situation, radical operation mode caused by the expansion of the private enterprises desire and drawbacks of the governance structure with the family business.Second is the analysis of industry,including the excess production phenomenon of PV and the plunge in our overseas market caused by the anti-dumping and anti-bribery of Europe and the United States.Third is the analysis of the intermediary institutions’dereliction of duty, like he sponsors’dereliction and the rating agencies’wrong rate. Fourth is the analysis of the regulatory authorities in China, like the illegal issue of the "11 CHAO RI Bond" and the incomplete information disclosure. Fifth is the analysis of investors, including their psychological expectations of rigid to honor and the lack of crisis response ability. The last one is the analysis of the media which always is overlooked in the finance market,and emphasize the effect of media’s unreal speech.The fourth part of the article is the enlightenment of "11 CHAO RI Bond" case, this is the foothold of the article. Through the analysis of "11 CHAO RI Bond"credit event, the author thinks that the market should built a multidimensional credit risk prevention system based on each market subject and this chapter mainly from the five aspects to provide advice. Firstly, the company should choose the right industry and run with the suitable management and corporate governance structure. Secondly, our regulatory authorities should build a unified regulatory standards and perfect the information disclosure system to provide a strict market environment, in addition, the government also should change its role position, guide the credit risk effectively release. Thirdly, to enhance the service quality of the bond market, China’s agencies need to improve their independence. Besides, to identify credit risk effectively, the bond market investors need to increase financial knowledge and also change their rigid expectations to honor. The last one is that the media need to improve the quality of their report, and help to provide a healthy public opinion environment for the bond market.The last part is the conclusion of this article,this part emphasize the value of the "11 CHAO RI Bond" credit event on how to prevent the credit risk of the bond market as well as the importance on the structure of multidimensional credit risk prevention system’s building.