Fugui Bird Group Bond Default Case Study

China's bond issuance began in the 1950 s,but limited by the influence of market mechanisms and policy environment,the development process is more tortuous and slow.Since 2005,China's bond market has gradually become standardized,and the issuance scale of bonds has also expanded rapidly.As China's economic growth slows down,the country goes to capacity,deleverage,and breaks the implementation of rigid redemption policies,the risk and probability of bond defaults increase.In 2016,the number of default bonds and the amount of default reached a peak.The 79 bonds of 34 bond issuers in the entire bond market defaulted,and the default funds involved about 40.3 billion yuan.In 2017,a total of 49 bonds defaulted,less than 2016 but with more default funds than 2017.As of the end of 2018,there were 125 bonds in China that defaulted.The default of bonds involved RMB 116 billion,and the number of defaulted companies increased by 43.The number of defaults in previous years was reduced,and 244 bonds were breached.The amount is also as high as 197.3 billion yuan,involving 103 defaulting enterprises.It can be seen from the above that the bond default event in China's capital market has entered an outbreak period,so we urgently need to improve the ability to prevent bond defaults.The default of the Fugui Bird Group Bond is a typical private enterprise debt default case.The “14 Rich Birds” bonds issued by the Fugui Bird Group cannot repay their debts on April 23,2018.On March 22,2018,the “14 Rich Birds” was released for the sale of redemption.There was a significant risk warning announcement.On April 12,2018,the declared return sale amount was 812 million yuan,and the default was confirmed on April 23,2018.This paper chooses Fujian Fugui Bird Group bond default incident as a case.First of all,this paper expounds the theory of information asymmetry and financial distress;Secondly,the article briefly introduces the general situation of the Fugui Bird Group,reviews the bond default process,and describes the impact of the breach of contract;Then,the internal situation,external environment and financial status of the Fugui Bird Group were analyzed to reveal the real reasons for the bond default.Finally,the author concludes that the company should learn to broaden the financing channels,diversify the risk of corporate bond default,establish a financial risk early warning mechanism as soon as possible,the rating agencies should improve the credit rating system,and the bond approval agencies should also improve the bond approval mechanism.The author hopes to provide a valuable reference for companies in the same industry through the case study of the default of rich birds.