Dandong Port Group Debt Default Case Study

The history of China's bond market has only been more than 30 years since its establishment.But all aspects still need to be improved in exploration.During the initial construction period,“rigid payment” environment severely deviates bond pricing from normal.Over-financing leads to gradual accumulation of credit risk.With the slow growth of China's economy and the implementation of the deleveraging policy,the credit risk exposure of the bond market has become more and more large,and the debt default has spread to all kinds of enterprises.The characteristics of new default entities in 2017 are different from those in the past.The operation of new default entities are normal,but there are serious excessive financing.The phenomenon of excessive financing in Chinese enterprises is common,and capital operation mode is basically to repay old debts by borrowing new debts.Due to internal and external factors,corporate refinancing capability is weakening,and credit risk is promoted immediately.This shows that excessive financing is the root cause of credit risk.Preventing excessive financing is extremely important for the smooth operation of the economy.This paper chooses Dandong port group as the research object,and deeply reflects the series of problems caused by excessive financing.The author analyzes the causes of default from the macro and micro level,and reveal how enterprises evolve from excessive financing to debt default.After studying,the Dandong port group's breach of contract is as follows: over-financing — borrowing new and retiring cycles — further expanding debt — poor financing — debt defaults.The early loose environment led to excessive financing and poor qualification,and the tightening of market liquidity aggravated the credit risk immediately.Perfecting financing mechanism has important practical significance for enterprises' sustainable financing and controlling credit risk.The author proposes the following suggestions for preventing over-financing of enterprises: Supervision should strictly approve the issuance of corporate bonds,weaken the pro-cyclical effect of the bond market,and urge brokers to manage the duration of bonds;the bank as the largest credit provider should do credit line management.Improve the comprehensiveness of corporate credit information;enterprises should formulate investment plans based on market demand and improve internal governance to prevent risks.