Analysis On Implementation And Problems Of Market-oriented Debt-to-equity Swap In Steel Enterprises

At present,the economic situation is complex and changeable.As a basic industry,steel has a significant impact on the national economy.However,high production capacity and high leverage continue to plague the development of steel enterprises.After vigorously reducing production capacity,de-leveraging has become the key point of steel enterprises.The leverage ratio of steel enterprises is generally on the high side,and the heavy financial burden has brought greater operating pressure to the enterprises.In October 2016,the State Council issued the "Opinions on Positively and Safely Reducing the Leverage of Enterprises" and its Annex "Guiding Opinions on Market-oriented Banks' Debt-to-Equity Conversion." Market-oriented debt-to-equity swap emerged as the times require.The development of debt-to-equity swap in China is divided into two rounds: the first round was a policy-oriented debt-to-equity swap in 1999,with a focus on resolving the non-performing loans of banks.This round of market-oriented debt-to-equity swap after 2016 focuses on reducing the debt ratio of enterprises.The essence is to improve the operating efficiency of enterprises and promote its long-term development.Market-oriented debt-to-equity swap has become an effective way for steel enterprises to reduce the burden and the leverage.Many steel enterprises have sought to get out of their difficulties through market-oriented debt-to-equity swap.However,under the current economic environment,the implementation of market-oriented debt-to-equity swap by steel enterprises is not ideal and there are certain problems.Therefore,it is necessary to deeply analyze the problems in the implementation process and related solutions.This paper takes steel enterprises as the research object.First of all,it analyzes the current situation of market-oriented debt-to-equity swap of steel enterprises from the aspects of contract scale,participants and methods of debt-to-equity operation.It is found that there are still some difficulties in landing the target enterprises.Because the implementation has some problems,such as difficulty in selecting target enterprises,single source of funds,high comprehensive cost,"clear shares and real debts" and the limited role of debt-to-equity swapfor steel enterprises;based on this,it is found that there are some important reasons,including the limited scope of target enterprise,lack of policy compensation mechanism and motivation,cumbersome and time-consuming implementation process,incomplete pricing mechanism and exit mechanism,and inadequate subsequent management.Furthermore,analyzing the industry's typical successful cases of Hualing Steel's market-oriented debt-to-equity implementation process,concluding its successful experience,and providing a reference for the market-oriented debt-to-equity swap of the entire industry,so as to come up with feasible suggestions to promote the successful implementation of the market-oriented debt-to-equity swap.The specifics include: rationally determining the scope of the debt-to-equity target enterprise,actively expanding market-based financing channels,simplifying processes and establishing green and fast-track channels,further improving pricing and exit mechanisms,and strengthening subsequent operations and equity management.