Research On The Credit Risk Of PV Enterprises: A Case Study Of The Bond Default Of Chaori

On March 7th 2014, Chaori Solar was the first Chinese firm ever to default on its corporate bonds in public offering bond market. The author believes that it is material and urgent to conduct credit risk assessment for listed firms. Altman’s Z-Score Model in 1968 and Zeta Model in 1995 are both classic models of credit risk assessment. The research target of this dissertation is “11 Chaori Bond” event. Based on the compatibility of Z-Score Model, this author is to reveal the complicated reasons of the default from the perspectives of company and industry. It also confirms that Z-Score is a more effective model than Zeta to assess the credit risk of “11 Chaori Bond”.Similar to Chaori Solar, most PV firms in China also suffer from excess capacity and weak demand. Based on the result of Z-Score Model, to further explore the relationship between financial indicators and company’s capability to shield against credit risks, the author selects 54 listed PV firms. By proposing hypothesis, building models and analyzing their 2014 financial indicators through SPSS 18.0 and Logistic Regression Analysis, the author confirms that financial indicators such as ROE, debt-to-equity ratio and liquidity quality all exert positive effects on PV firms’ capability to shield against credit risks.By conducting data analysis for “11 Chaori Bond” event, the purpose of this dissertation is to explore the solutions for financial market liberalization and investment legal protection. Furthermore, to avoid investment loss caused by credit risk, investors are encouraged to figure out the relations between financial indicators and credit risk, corporate development, industry situation.