Case Study On Bond Default Of Wintime Energy

For the whole year of 2018,China's bond market has been hit by frequent default events of 52 companies,with 128 bonds of 89.09 billion yuan.Wintime Energy was in the wave of bond defaults.In July 2018,the "17 Wintime Energy CP004" issued by Wintime Energy failed to pay on time,causing a substantial default.Subsequently,a series of debt defaults expanded further and further.As of December 31,2018,Wintime Energy and its group companies have defaulted on 14 bonds with a total default amount of 16.26 billion yuan,accounting for nearly 20% of the total default amount in the bond market for the whole year of 2018.Wintime Energy bond default is a typical case in which resource-based enterprises implement diversification strategy and aggressive financing strategy to seek business transformation under the background of supply-side structural reform and reduced growth of social financing scale,and thus fall into financial difficulties and default of bonds.It has practical significance for the study of this case.This paper takes this default event as a case study,through extensive collection of domestic and foreign relevant research data,analysis of corporate strategy,financial data,in-depth exploration of the causes of the breach of contract and enlightenment.Firstly,on the basis of elaborating the domestic and foreign research status of corporate bonds,default risk and diversification strategy,this paper describes the basic situation of Wintime Energy,the company's three business transformations and the current financial difficulties,and reviews the process,results and subsequent treatment of Wintime Energy bond default.Secondly,the paper mainly analyzes the root cause of Wintime Energy bond default from the aspects of diversification strategy,financing strategy and corporate governance.This paper believes that the long-term implementation of diversified expansion strategy,aggressive financing strategy makes Wintime Energy face greater financial risks.Major shareholders frequent pledge of equity aggravates the possibility of financial crisis.Corporate governance failed to achieve effective risk prevention and control,so that financial risks accumulated year by year.Finally,through the study of Wintime Energy bond defaults,this paper argues that the companies should implement appropriate diversification strategy,focus on developing business core competitiveness,attach great importance on internal financing ability,develop company strategy that matches the financing structure,and further strengthen corporate governance and risk control ability,thus precaution against financial risks effectively and maintain a good development.It is hoped that the study of this case will be helpful for enterprises to learn how to formulate strategies,rationally finance,manage companies,guard against financial risks and avoid the occurrence of breach of contract in the process of implementing diversified development strategy.