A Case Study On The Bond Default Of A Company

With the continuous development of China’s bond market,bond financing has become an important financing channel.However,the risk brought by the rapid expansion of the bond market has gradually emerged.Since the announcement of the default of the "11 Chaori bond" in 2014,the default rate has been increasing.In 2018,125 bonds had defaulted,exceeding the total of the past four years,which has aroused widespread concern in the market.In this context,the analysis of the causes and countermeasures of bond default will help enterprises to improve their ability of operation and management,strengthen the supervision of regulatory agencies and help investors to establish a sense of risk,so that to promote the sustainable and healthy development of bond market.In this thesis,A company is selected as the research object,whose main business is biomass power generation,which has a high reputation in the industry.However,since the company announced the bond default in May,2018,its risk has been exposed continuously,and all the bonds which are issued have defaulted,the enterprise is facing a great financial crisis.In the analysis of bond default of A company’s bond default case,the concept of bond default is introduced firstly,and the information asymmetry theory,capital structure theory and financial distress theory are elaborated.Secondly,introduced the basic situation of A company,its bond issuance and default process also reviewed.Thirdly,the causes of bond default of A company are analyzed from external and internal factors.The external factors are macroeconomic downturn,the contraction of financing channels,the influence of policies on the industry,the large investment in biomass power generation and the low cost of information disclosure violations.Internal factors are reflected in investment activities,financing activities and business activities.Investment activities is radical investment policies,financing activities are heavy debt burden,high financing cost,operating activities are defects in internal control and poor profitability of the company.Then analyzes the impact of A company’s bond default on its investors and their own manufacturing.Finally,according to the case of A company’s bond breach,this paper summarizes and puts forward the lessons.Enterprises should scientifically formulate investment and financing strategies,improve internal control,establish financial risk early warning mechanism and pay attention to the industry;regulators should further ease the financing difficulties of private enterprises and strengthen the supervision of information disclosure;investors should establish a sense of risk and rights protection.I hope this thesis can provide some enlightenment for users through the research and analysis of bond default.