"17 Corps Sixth Division SCP001" Bond Default Case Study

There is always a so-called "city investment belief" in the bond market.It is believed that urban investment bonds have endorsements of government credit and there is no credit risk.This has also led to the false prosperity of the city investment bond market,the unevenness of bond products and the high asset bubble.Along with the deepening of the supply-side reform,economic reforms have entered the deep-water zone,and the credit risk of urban investment bonds has continuously emerged.Under this circumstance,analyzing the case of city investment bond default will help to understand the influencing factors of bond default and reduce credit risk.First of all,the "17th Corps Sixth Division SCP001" is the first city-invested bond that defaulted on the bond open market.Compared with other Chengtou bonds that have defaulted on non-standard products(trusts,asset management plans),the "17 Corps Six Divisions SCP001" bonds have rich information on default,and the market has far-reaching effects,with strong typicality and specimen significance.Therefore,this article takes the “17th Corps Sixth SCP001” bond default case as the research object.Based on the analysis of domestic and foreign bond defaults and the literature of urban investment bonds,this paper determines the research direction and the framework of the paper.Secondly,on the basis of reviewing the development history of China's urban investment bonds and the typical urban investment risk events,this paper systematically analyzes the mechanism of credit risk generation of urban investment bonds,and sorts out the influencing factors from the exogenous and endogenous elements.A credit risk assessment framework is derived.This paper attempts to reveal the realistic basis of the influencing factors.The study found that macroeconomic policies,local government behavior,corporate operations and credit ratings are the main influencing factors,which also laid the foundation for the following discussion.Thirdly,in the case introduction part,this article comprehensively introduces the basic situation of the state-owned assets of the six parties of the bond default body from the aspects of historical evolution,main business and company positioning,and reviews the whole process of the "17 Corps Six Division SCP001" from the issuance to the breach of contract.The subsequent effects of the bond were analyzed.In the case analysis section,this paper analyzes the four levels from macro policy,local government behavior,companyfinancial indicators and credit rating according to the above framework.First,in order to eliminate the operational bubble of the city investment company,the state has introduced a number of control measures,which objectively increased the difficulty of financing the six divisions of state capital.Second,the local government's financial capacity is weak,and the six divisions of state capital are used by the financial department to make huge amounts of money.The business structure of the six divisions of state-owned assets is frequently adjusted under the leadership of the administration,which is not conducive to the stable operation of the company.Third,the state-owned assets of the Sixth Division are over-reliant on financial subsidies,their own profitability is poor,and they lack the ability to cope with market fluctuations.Fourth,during the entire case,the credit rating company failed to play its due role as a warning.Finally,in the Summary and Recommendation section,this article outlines the main conclusions.In general,the debt default of the six divisions of state capital is superimposed by multiple factors such as policy regulation,weak local government support,and poor self-management.Eventually,liquidity is insufficient,resulting in failure to perform on time.Combined with the problems exposed by the case,this paper puts forward suggestions from the perspectives of system construction,local government management and company management.At the same time,this paper looks forward to and discusses the future development trend of this topic.