The Research On Wuling Power Corporation Sovereign Debt Risk And Prevention

With the regionalization and globalization of economy, borrowing sovereign debt,which is an important means of economic development for government or enterprise,can make up for the shortage of domestic capital and accelerate development.Although our country has carried out reform and opening up20years, finance islagging behind in innovation, business leaders on the financial instruments arerelatively novice. Presently, the risk of borrowing sovereign debt exists, and it doesnot work closely enough between the research of risk management and the practice.Besides, the existing analysis methods of sovereign debt risk management are notperfect, and some of them stay in a much earlier stage, which can not really solve theproblem of enterprise risk management. Therefore, theoretical research and practiceneed to be further strengthened.As a member of foreign exchange management in Hunan Province, I am of theresponsibility of supervision to prevent the risk of corporate debt. With the past fiveyears, I gained some experience, and made acquaintance of the problem about theunderstanding of corporate debt risk. This paper selects Wuling Power Corporation asthe object of study. By analyzing the concept of foreign debt and sovereign debt,sovereign debt risk and its effects, and thus from a risk management theory, modernportfolio theory, hedging theory, the theoretical basis for starting interest rate paritytheory focuses on sovereign debt risk management theory. It analyzes the hedginginstruments and methods from the company operations and debt situation, and showthe potential risks faced by sovereign debt. According to the sovereign debtmanagement situation, main problems and reasons, the objective of sovereign debt riskmanagement can be determined. Accompany with industry characteristics, the riskmanagement of sovereign debt contract terms, financial, interest rate and exchangerate should be strengthened, besides it is sure that the company must establish a soundearly warning system for sovereign debt risk and responsibility system, which havecertain value of references for other companies.