Research On Corporate Bond Default And Risk Prevention

In recent years,the domestic bond market has developed rapidly,various bond innovations have emerged one after another,and the scale of the stock has been continuously expanded.As of the end of 2020,the total bond stock is approaching 100 trillion yuan,and the domestic bond market has ranked second in the world.However,due to the slowdown in macroeconomic growth and the advancement of a series of policies such as the state’s deleveraging,coupled with the immature domestic bond market,frequent defaults have occurred,the credit crisis has spread to all walks of life,and bond defaults have gradually become normal.Today,the bond credit crisis has gradually weakened investors’ confidence and seriously affected the sound and well-orderly development of the bond market.Therefore,it is imperative to analyze various reasons for bond defaults and study control measures for default risks.Baan Water is a private water treatment company that has gradually developed and grown by virtue of its environmental protection policy.It issued a 500 million yuan "17 Baan Bond" in 2017,and subsequently experienced a substantial default in2020.This article takes Ba’an Water as the research object and uses comparative analysis and event research methods to deeply analyze the entire process of the company’s bond issuance to default,so as to reveal the various reasons for the company’s bond default and the economic consequences caused by default.(1)First,this article analyzes the company’s motives for issuing bonds,and summarizes the company’s guarantees for bond repayment,laying the foundation for the following analysis of the causes of default.(2)Secondly,this article reveals the impact of the macroeconomic downturn,financial deleveraging and intensified internal industry competition on the company’s financing and profitability through the analysis of the external environment.(3)Furthermore,this article analyzes the company’s business strategy based on the principal-agent theory and risk management theory,revealing the fact that the management’s blind investment increases the financial pressure of the company;and based on the theory of information asymmetry,the company’s internal governance structure is explored and analyzed.At the same time,the company’s capital structure is obviously unreasonable based on the analysis of the optimal capital structure theory;it also analyzes the supervision dereliction behavior of the supervisory and bond trustees through the information asymmetry theory.(4)Finally,this article uses the incident research method to summarize the economic consequences of this breach of contract to Baan Water.The event of default has sent unfavorable signals to the market about the deterioration of the company’s operations and the break of the capital chain,which has a serious adverse effect on the price of stock,indirectly deteriorates the company’s refinancing channels,and ultimately affects normal production and operation activities.Based on the above analysis,this article studies the relevant countermeasures to control the default risk from the three levels of market supervision,corporate operation and bond investment.In terms of market supervision,this article believes that the bond issuance and information disclosure system should be improved,the responsibilities of intermediaries should be supervised,and the law and supervision system ought to be improved;Financial management level;in terms of bond investment,this article believes that diversified investments should be used to diversify risks and establish post-investment tracking mechanisms.This article proposes the above-mentioned countermeasures to control bond default risks,hoping to bring practical and feasible suggestions to the three parties,help alleviate the current severe credit crisis in the bond market,and encourage the sound and well-orderly development of the bond market.