Research On The Motivation And Effect Of Sustainable Debt Financing Of State-owned Enterprises Under The Background Of Deleveraging ——A Case Study Of China Railway Group Limited

In 2008,in order to buffer the domestic impact of the world financial crisis,my country issued a series of expansionary policies to expand domestic demand and promote steady and rapid economic growth,which is often referred to as the "four trillion stimulus plan".With the implementation of the policy,the domestic economy began to grow rapidly,but high leverage and debt risks also followed.From 2008 to 2016,the leverage ratio of my country’s corporate sector rose rapidly from 95% to 158%,and the leverage ratio rose too fast.In order to prevent and resolve debt risks,avoid financial crises,and stabilize the domestic economic environment,the Central Economic Work Conference in late 2015 first proposed the concept of "deleveraging" and listed deleveraging as one of my country’s supply-side structural reform tasks.Among them,the high debt ratio of state-owned enterprises is a problem that plagues the deepening of reform of state-owned enterprises.Therefore,state-owned enterprises are the key targets for deleveraging.Under the rigid requirements of the deleveraging policy,state-owned enterprises are urgently seeking a way to deleverage.At this time,perpetual bonds,an equity instrument with both "equity" and "debt" properties,began to enter the public eye.Perpetual bonds are an emerging financial instrument in China.The issuance of perpetual bonds that comply with relevant accounting policies can be included in equity to reduce the asset-liability ratio.In 2020,the domestic perpetual bond issuance scale will reach 1,662.6 billion yuan,of which the issuance scale of state-owned enterprises will account for more than 90%.The case study object of this paper,China Railway Group,is a large state-owned construction enterprise,which has a large capital demand in the construction industry.In the face of policy requirements and its own operating capital needs,it chooses to issue a large number of perpetual bonds to adjust leverage and alleviate the problem of tight cash flow.As of December 15,2021,the stock of perpetual bonds of China Railway and its subsidiaries was 71.53 billion yuan,making it the state-owned enterprise with the largest stock of perpetual bonds in the domestic construction industry.By summarizing and summarizing the literature and achievements of domestic and foreign experts and scholars on perpetual debt research,this paper will combine the domestic policy background of the times to sort out the implementation of the deleveraging policy,grasp the current deleveraging goals of state-owned enterprises,and clarify the current development policy environment of state-owned enterprises to discuss the case of China Railway.The case analysis part of this article firstly grasps the nature of the enterprise and its operating debt status,and then understands its main business income and debt status,and then conducts a statistical analysis of its perpetual bond issuance status over the years,and introduces the current perpetual bond issuance plan and related design terms.And analyze the reasons for its perpetual bond issuance.The case further analyzes the financing effect of perpetual bonds.First,the comparative analysis method is used to compare and analyze the financing costs,income and financial leverage of ordinary shares,ordinary bonds and perpetual bonds,and discuss the differences under different financing methods.The pros and cons of the method.The second is to use financial indicators to evaluate China Railway’s solvency,profitability,operating capacity and cash flow before and after the financing of China Railway’s perpetual bonds.Finally,combined with the case,we discuss the various risks behind China Railway’s large-scale issuance of perpetual bonds.Based on the discussion and analysis of perpetual bonds in the full text,relevant suggestions are put forward.Through the analysis and discussion of the case of China Railway Group,it is concluded that there are three main reasons for the issuance of perpetual bonds by China Railway Group.One is to meet the rigid requirements of national policies on the leverage ratio of state-owned enterprises and reduce the leverage ratio;The third is to expand financing channels to meet capital needs.China Railway’s use of perpetual bond financing will face policy risks,debt repayment risks,credit risks and market investor risks.Therefore,according to its existing deficiencies,it mainly proposes different suggestions for issuers,investors and regulators: First,issuers should pay attention to Policies are released to conform to the development of the times;strengthen the self-awareness of enterprises,rationally allocate the scale of issuance;expand diversified financing channels and enhance the ability of enterprises to resist risks.Secondly,the domestic policy and regulations related to perpetual bonds should be gradually improved to protect the relevant rights and interests of investors,take all factors into consideration,optimize the deleveraging policy,and orderly reduce the space for leveraging the use of perpetual bonds.Finally,perpetual bond investors should prudently choose perpetual bond investments based on their own investment needs.