"Two-step" Market-oriented Debt-to-equity Swap Program Design And Effect Researc

In the 2015 central economic work conference,the government proposed that the economic and social development must firmly grasp the five important tasks of "de capacity,de inventory,de leverage,cost reduction,and short board".In particular,the State Council attaches great importance to "deleveraging".In 2016,the State Council issued and ,which clearly pointed out that the leverage ratio of enterprises can be reduced by orderly carrying out the method of debt to equity swap of market-oriented banks.A new round of market-oriented debt to equity swap began.Under the background of market-oriented debt to equity swap,a number of entity manufacturing enterprises have become the first batch of practitioners to implement the market-oriented debt to equity swap.China heavy industry,China aluminum industry,Wuhan Iron and Steel Group,Huarong energy,Yunnan tin industry,Changhang Phoenix,etc.have carried out market-oriented debt to equity swap,and many asset management companies have actively participated in it.At the same time,since the issuance of the new round of market-oriented debt to equity policy,the market has also faced with a lot of intention contracts,but the actual implementation of the project is less.The main reason is that the market-oriented debt to equity swap still faces a series of implementation difficulties in the four aspects of fund-raising,investment project selection,project management and exit mechanism.This paper takes the case study of the scheme design and effect of debt to equity swap in China CSSC Holdings Limited(CSSC).Firstly,it summarizes the domestic and foreign scholars' research on the motivation,practice and implementation effect of debt to equity swap through literature analysis,and then analyzes the possible causes of CSSC participation in the market-oriented debt to equity swap,through theoretical analysis,find the key points to be considered in the scheme design,and the possible effects will appear after debt to equity swap.On this basis,the paper is used case study to analysis the debt to equity swap of CSSC.In the process of case analysis,this paper finds out that the reasons for the implementation of debt to equity swap in CSSC are the downturn of the industry situation,the expansion of debt scale,the poor profitability,and the pressure of industrial transformation and upgrading;the reasons why CSSC can carry out the market-oriented debt to equity swap are the government's policy support,the good reputation of debt to equity enterprises,the matching source of funds,and the suitable investment institutions in the process of equity swap,the speed of reducing leverage,policy compliance,exit mechanism and income are the core interests pursued by all parties in the process of debt to equity swap.In contrast,the "two-step" scheme satisfied the needs of all parties in debt to equity swap,especially in terms of reducing leverage speed and exit mechanism.The market-oriented pricing method balances the demands of maintaining and increasing the value of state-owned assets of debt to equity swap enterprises and the return of investment institutions,thus promoting the smooth completion of debt to equity swap in CSSC.In the aspect of implementation effect,it is concluded that the debt to equity swap has a positive effect on the company's short-term stock price and financial performance,and the "two-step" scheme has also reached the core demands of both sides of the initial debt to equity swap.The deficiency of debt to equity swap is that institutional investors fail to purchase and actively participate in the corporate governance of debt to equity enterprises.Based on the analysis and summary of the motivation,feasibility,scheme design and implementation effect of debt to equity swap,this paper puts forward that the government should continue to improve the relevant policies of market-oriented debt to equity swap,especially in mobilizing the enthusiasm of institutional investors to participate in corporate governance.It also proposes that investment institutions should strictly perform supervision and management responsibilities and control the core interests in the process of investing in debt to equity enterprises.This paper puts forward that the enterprises should regard the market-oriented debt to equity as the driving force for the transformation and upgrading of enterprises rather than the "life-saving straw" at the time of life and death,and suggests that enterprises that want to implement the market-oriented debt to equity swap can adopt a more advantageous "two-step" market-oriented debt to equity scheme.CSSC is not the first enterprise to carry out the market-oriented debt to equity swap,but the market-oriented debt to equity swap of CSSC has undergone major project restructuring.In the process of debt to equity swap,the scheme of purchasing assets by non-public issuance of shares has been adjusted many times.The superiority of the design of the scheme is tested.Through the case analysis of CSSC,it will be helpful for us.This paper enriches the existing market-oriented debt to equity theory,provides the factual basis for the "two-step" market-oriented debt to equity scheme design and effect research,and provides empirical support for the follow-up enterprises who want to carry out the market-oriented debt to equity swap.