Research On Default Risk Of Chinese Corporate Bonds

The channels for direct financing of enterprises include stocks and bonds.In developed countries,the bond market is the main market for financing.Although the Chinese bond market has started slowly and is lagging behind the stock market,in recent years,decentralizing power and letting the market play a full regulatory role has enabled the Chinese bond market to develop rapidly.The number and size of bond issuance has been rising year by year,and the corporate bond market has performed significantly.The bond market will experience bond default on the road of maturity.Due to the existence of China's rigid redemption,it was not until 2014 that the first bond default occurred in China.As China's macroeconomic growth slows down and the country's “de-leverage” policies are implemented,defaults in the bond market occur frequently,and market risks increase.Through the analysis,summary and experience of the event of default,investors can be given reference to the risk identification and the development of the Chinese bond marketOn March 15,2018,Shenwu Environmental Technology Co.,Ltd.announced that due to the tight liquidity of the company,it failed to pay the “16 environmental protection bond” principal and interest as scheduled,which constituted a substantial breach of contract.This is also the first bond default case in China's listed environmental protection industry private companies.This paper takes Shenwu Environmental Company as the case study object,through qualitative analysis and model quantitative analysis,in order to provide some suggestions for investors and corporate bond issuers.Through the research and analysis of this case,the following conclusions can be reached: First,the Shenwu Environmental Company issued bonds mainly to pay for the purchase of the project and supplement the working capital,at that time,the company needed a lot of money to speed up the pace of core technology industrialization and the process of key demonstration projects.Second,the occurrence of the bond default incident of Shenwu Environmental Co.,Ltd.is affected by macro and micro aspects.Externally,China's macroeconomic slowdown and the implementation of a series of “de-leverage” policies have led to credit contraction,which has led to a tight capital chain.At the same time,Shenwu Environmental is difficult for private enterprises to raise funds.The entry of state-owned enterprises by central enterprises has led to deterioration of industry competition,the profitability of upstream enterprises has declined,and the repayment of project funds has been postponed.These circumstances have affected the normal operation of the company;Internally,the company's financial situation also has problems.The negative net cash flow of the operation shows the company's bad business conditions.Over-investment makes the company's asset-liability ratio increase year by year.The company has risks in its operations,and the environment of de-leveraging accelerates the risk exposure,the test results of the KMV model are also matched with the company's risk accumulation process.Third,investors in the market have insufficient ability to identify risks.This paper analyzes the financial data of the default group and the non-default group and the Z-value model test,and finds that the total return on assets,net sales rate and current ratio react to changes in risk earlier.Investors can make risk prevention by observing these indicators.