Analysis On The Motivation And Effects Of Private Enterprises’ Market-oriented Debt To Equity Swap

At the end of 1990 s,in view of the high non-performing loan rate of banks and the heavy debt burden of state-owned enterprises,the state has established four asset management companies to take over the non-performing loans and help state-owned enterprises solve the problem of high asset liability ratio.Under the new normal of economic development,China’s economic downward pressure is greater,and economic growth is slowing down.In the past decade,the leverage ratio of non-financial enterprises continues to rise,which is far higher than that of the United States,Japan and other countries.In order to solve the high leverage ratio of enterprises and prevent systemic financial risks,in 2016,the State Council issued relevant documents calling for the solution of the problem of high liabilities of enterprises by means of market-oriented and legalized debt to equity swap.By the end of April 2019,106 enterprises have implemented market-oriented debt to equity swap,involving 26 industries such as coal,steel and nonferrous metals.Among them,the debt to equity swap projects of state-owned enterprises are the main ones,and the proportion of private enterprises signing contracts is less than7%.In July 2019,the national development and Reform Commission and other four departments jointly issued the key points for reducing the leverage ratio of enterprises in 2019,which not only encourages private enterprises to actively participate in the market-oriented debt to equity swap,but also supports private enterprises to participate in the debt to equity swap of state-owned enterprises.At present,there are many literatures on the motivation and effect of debt to equity swap in state-owned enterprises,while scholars pay little attention to the market-oriented debt to equity swap in private enterprises.However,private enterprises are an important part of the national economy.The contribution rate of private enterprises to national GDP is more than 60%,providing more than 80% of employment and more than 50% of tax revenue.Yuanxing energy is one of the private enterprises which launched the market-oriented debt to equity swap earlier.Studying the motivation and implementation effect of the project has important guiding significance for private enterprises to implement debt to equity swap.This paper first introduces the theories on the motivation and performance analysis of debt to equity swap,then combs the relevant regulations of market-oriented debt to equity swap,compares the differences between the elements of the two rounds of debt to equity swap,and then analyzes in detail the current situation,motivation and mode of private enterprises’ market-oriented debt to equity swap.Secondly,it introduces the basic situation of the company,analyzes the industry,which pave the way for analyzing the motivation of debt to equity swap.Then it combs the motivation of Yuanxing energy’s market-oriented debt to equity swap,and then analyzes the effect of Yuanxing energy’s market-oriented debt to equity swap from three aspects: short-term market effect,financial effect and non-financial effect.Finally,it summarizes the case and puts forward policy suggestions.