| Since the advent of the bond market,it has become an indispensable part of China’s capital market and an important place for enterprises to finance funds in the capital market.However,in recent years,under the background of the gradual slowdown of China’s economic growth,the cyclical fluctuations of the industry,and the increasingly strict supervision of the credit bond market,credit bond default events have begun to appear and break out.In March 2014,the "11Chaori Bonds" default was the first substantial credit bond default event in China’s capital market,after which the frequency of credit bond defaults and the amount of defaults increased,and the default subjects also spread from private enterprises to state-owned enterprises,and the varieties of credit debt defaults became more and more diverse.China’s credit bond market is accompanied by many problems in the process of continuous development.Since 2020,there have been more and more high-rated,state-owned entity credit bond default events in China’s bond market,which has damaged the legitimate rights and interests of investors and once again shattered the belief in "rigid payment" of state-owned enterprises.Therefore,how to reduce the occurrence of credit bond default events,protect the legitimate rights and interests of investors,and maintain the steady development of the credit bond market is a matter of great concern at present.This article conducts a case study on the default of credit bonds of Yongcheng Coal &Power Holding Group Co,Ltd(here in after referred to as Yongcheng Coal & Power)in 2020.First of all,introduce the basic situation of the company.Yongcheng Coal & Power is a large provincial local state-owned enterprise in Henan Province,mainly engaged in coal,chemical,trade,nonferrous metals,equipment and other businesses,is one of the three high-quality anthracite coal bases in China.Secondly,analyze in detail the process of defaulting on a company’s credit debt.For a long time,Yongcheng Coal & Power’s aggressive expansion development strategy,poor profitability of the non-coal sector eroded the profits of the coal sector,resulting in a continuous compression of operating profits,the company’s loss reached451 million yuan until 2020,cash flow is tight.Since Yongcheng Coal & Power began to issue credit bonds in 2008,the scale of credit bond issuance has been rising,the variety of issuance has become more and more diverse,and the blowout issuance of ultra-short-term financing bonds by Yongcheng Coal & Power in 2018-2020 has also made Yongcheng Coal & Power’s debt platform high,forming a debt financing dilemma of "raising bonds with debts" "borrowing short to repay long",superimposing the business difficulties of enterprises and the serious misalignment of operating entities and financing entities,huge amounts of money occupied by related parties,financial fraud and many other enterprise management dilemmas,as a result,the credit debt default of Yongcheng Coal & Power’s debt platform high,forming a debt financing dilemma of "raising bonds with debts" "borrowing short to repay long",superimposing the business difficulties of enterprises and the serious misalignment of operating entities and financing entities,huge amounts of money occupied by related parties,financial fraud and many other enterprise management dilemmas,as a result,the credit debt default of Yongcheng Coal & Power is on the verge of breaking out.On November 10,2020,Yongcheng Coal & Power was unable to repay the 3rd ultra-short-term financing bonds of 2020 with a total principal and interest of 1.03 billion yuan,and on November 23 of the same year,the 4th and7 th ultra-short-term financing bonds of Yongcheng Coal & Power in 2020 defaulted respectively,and the total default of the three ultra-short-term financing bonds was as high as3.09 billion yuan.Finally,the default of Yongcheng Coal & Power’s credit bonds has also had a negative impact on Yongcheng Coal & Power,investors and the Henan Province’s city investment bond market.The default of credit bonds has led to the downgrading of the credit rating of Yongcheng Coal & Power,the financing channels of the bond market have been cut off,and the cost of debt financing has increased;the default of credit bonds has also reduced the cash flow of Yongcheng Coal & Power operating activities and investment activities,which is not conducive to the development and operation of enterprises and undermines the long-term competitiveness of enterprises;the default of credit bonds has damaged the legitimate rights and interests of investors,the decline in economic added value has reduced the equity returns of shareholders,and the failure of bonds to be paid on schedule has caused creditors to suffer losses;The default of credit bonds also impacted the primary market and secondary market of city investment bonds in Henan Province,issuance and net financing in the primary market declined,and the credit spread in the secondary market widened.The main reasons for the default of Yongcheng Coal & Power through research in this thesis are as follows:(1)The development strategy of Yongcheng Coal & Power’s aggressive expansion has led to the default of corporate credit bonds,and the strategic radicality increases the risk of corporate debt default through negative impact.(2)Yongcheng Coal & Power’s longterm huge credit det financing has supported a radical expansion strategy,and the company’s financing model of " debts to feed debts " "borrowing short to repay long" has exacerbated the risk of credit debt default.(3)Yongcheng Coal & Power’s fragile corporate governance and low-quality internal controls are the fundamental factors of credit debt default.On the one hand,weak corporate governance mechanisms can exacerbate a company’s financial risk by influencing its investment and financing decisions.On the other hand,low-quality internal controls make companies vulnerable to breaches,accelerated blind expansion,and undermined risk management capabilities.And in the external environment of macroeconomic downturn,industry policy risks,regulatory policy risks,and the external environment in which the lagging rating risks of credit rating agencies are found through the comparison of Z-value scoring systems,industry policy risks,regulatory policy risks as well as through the Z-value scoring system comparison to find the credit rating agency lagging behind the rating risk,the company’s credit debt is on the verge of erupting.On the basis of research on causes and economic impacts,this thesis concludes that companies should reduce the internal risk of credit debt default by improving corporate governance,improving profitability,improving financial situation,and using reasonable financing methods;in addition,external institutions should strengthen supervision,improve rating mechanisms,strengthen investor education and protection to reduce the system risk of credit debt default.The application value of this thesis lies in: on the one hand,it fills the research at the company level with a more comprehensive analysis,which not only clarifies the internal factors of corporate credit debt default,but also reveals the specific impact of credit debt default on the company,which has certain theoretical research significance.On the other hand,the research in this thesis can also provide a certain reference for the issuance and management of credit bonds and the supervision of bond markets by other coal enterprises and local state-owned enterprises. |
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