China Shipbuilding Industry Co.,Ltd. Market Debt-to-equity Conversion Performance Analysis

The non-performing loan ratio of China's commercial banks remained high in the late 1990 s.At that time,in order to help commercial banks deal with such high distressed assets,the People's Bank of China issued the "Opinions on Several Issues Concerning the Implementation of Debt-toequity Swap".This opened the curtain of China's policy debt-for-equity swap.After 17 years,at the Central Economic Work Conference,“de-leverage” was regarded as one of the five major tasks of “three to one,one reduction and one supplement”,and efforts were made to help some of the industries suffered from cyclical adverse factors,overcapacity and high debt ratio.Under the background of declining leverage and steady growth,debt-to-equity swaps have once again entered the historical arena.In this context,China Heavy Industries introduced eight investment institutions to implement debt-to-equity swaps for its subsidiaries,Wuchuan Heavy Industry and Dachuan Heavy Industry.This paper takes this debt-to-equity swap as the research object,and analyzes the problems of debtto-equity swap,debt-to-equity operation design,debt-to-equity swap effect and debt-to-equity swap process.It is found that this debt-to-equity swap is Under the market mechanism,it satisfies the "de-leverage" policy orientation and the development of China's heavy industry transformation;in terms of transaction operation design,compared with the 1999 policy-based debt-to-equity swap,the transaction is selected by the investment institution,pricing mechanism,The exit mechanism is more market-oriented in three aspects;in terms of effect,the short-term performance of the debtto-equity swap is obvious,and the long-term performance improvement is still affected by the industry environment,and still needs to be exerted.Enhanced,the financial structure has improved;but at the same time,due to lack of practical experience and inadequate policies,the transaction may still have some problems.All in all,the debt-to-equity swap has somewhat slowed the debt burden of China's heavy industry.Although there may still be flaws,the last successful debt-toequity swap case is worthy of reference and reference by other state-owned enterprises in similar situations.