Case Study On Bond Default Of Anhui Shengyun Environmental Protection Co.,LTD

Since China Securities Regulatory Commission(CSRC)issued the Measures for the Administration of the Issuance and Trading of Corporate Bonds in 2015,the development speed of corporate bonds has increased,and the bond market has become the third largest financing place following the bank loan market and the stock market.However,recently bond defaults occur frequently,and many companies fall into the crisis in which they fail to pay their debts due and payable.This paper is to study the corporate bond defaults through case analysis to provide some reference for other companies.Domestic and foreign scholars’ research on bond defaults has focused on empirical research based on the entire bond market.In the existing literature,there is less literature on the research of bond default from the perspective of the issuer.Existing case studies have focused on Northeast Special Steel.Xiang’e Debt,and Tianwei.Therefore,from the perspective of bond issuers,this paper selects Shengyun Environmental Protection co.,LTD,which has recently defaulted on bonds,as a case study object,analyzes the causes of corporate bond defaults,and the impact of bond defaults on bond issuers,and proposes corporate precautions.Bond defaults are suggested for this crisis.The indudtry which Shengyun Environmental Protection co.,LTD engages in is generating electricity through waste incineration.In recent years,local governments have planned the harmless treatment of domestic waste,and the market demand is broad.However,Shengyun Environmental Protection co.,LTD occurred three bond defaults in 2018,which weakened the company’s external financing capacity and hindered the production and operation of the company.Through research,it is concluded that the decline of the macro economy,ban on government guarantees for PPP projects,new rules on asset management,and fierce competitions make the company face risks of bonds defaults.External factors are not the root causes of corporate bond defaults.Company profitability has decreased,and operating income and cash inflows from operating activities have been mismatched,which result in the reduction of endogenous cash.Radical investment in BOT projects has incurred heavy capital occupation.Concentrated debt maturity,excessive reliance on the borrowings from non-financial institutions,and short-term loans for long-term investments have brought about unreasonable debt maturity structures.All above factors have occurred,and the company’s liquidity has become extremely poor.In the end,bond defaults occur.According to the analysis of the reasons,following countermeasures for the company have been put forward in order to prevent bond defaults.Based on a comparative analysis of Shengyun Environmental Protection co.,LTD and other seven companies in the industry of power generation through waste incineration,and a longitudinal analysis of the changes in financial indicators of Shengyun Environmental Protection co.,LTD,the early warning mechanism of corporate bond defaults in the industry of power generation through waste incineration is to be established.