A Case Study Of Brilliance Auto Bond Defaults

In recent years,bonds are an important investment and financing tool in the market,along with the continuous development and improvement of China’s bond market,which have become an important means of financing for more and more enterprises.With the continuous growth of the scale and quantity of the bond market,the problem of bond default has become increasingly prominent.The problem of bond default has involved various industries,covering different enterprise nature.Since 2020,the nature of defaulting enterprises is gradually spreading to state-owned enterprises,the defaulters have high credit ratings,and the default scale of state-owned enterprise bonds hit a record high,which has aroused attention to the default problem of state-owned enterprise bonds.Brilliance Automobile Group Co.,Ltd.is a famous state-owned automobile enterprise in Liaoning Province.The company’s "17 Huaqi 05" broke the contract suddenly and quickly entered the bankruptcy reorganization procedure one month later,which caused an uproar in the market.This paper selects the default event of Huachen automobile group as the research object,because it causes high market attention and it comes from its special identity as an old state-owned automobile enterprise with high credit rating.Based on the above background,this paper first introduces the default case,including the company’s equity,main business,bond issuance and other basic information.And it combs the precursors of bond default,the process of bond default and the follow-up progress of default are analyzed.Based on this,the external causes and internal influence of the company leading to default are found in the case analysis.The causes of default are analyzed by using comparative analysis,financial data analysis and Z-score default early warning scoring model.The results show that the external causes of default include macro-economy,local government’s willingness to help,industry development and stakeholders,while the internal causes include unreasonable “Strong son and weak mother”operation structure,poor financial performance and other problems in the operation process.At the same time,it analyzes the actual impact of bond default on investors,the company’s own operation,and the bond market;Finally,although the bond default of Brilliance Automobile Group has certain characteristics,but the case study is not only limited to their own uniqueness,but also summarizes the common problems reflecting the market from the personality.Through this bond default event,the Enlightenment of preventing bond default is formed: the Enlightenment of bond issuing enterprises includes improving their own brand ability,reasonably controlling financial leverage,paying attention to changes in the external environment of the market.The enlightenment to bond market includes reducing the rigid cash expectation,Improve the quality of credit rating,and improving the construction of credit rating system.The enlightenment for investors includes strengthening rational investment consciousness,improving risk identification ability and strengthening post investment tracking management.In order to prevent and control the risk of bond default and maintain the stable and healthy development of the bond market.