Research On The Risk Of Bond Default Of State-owned Enterprises

Many investors have a "rigid payment" belief in bonds.Among them,state-owned enterprise bonds are highly trusted by investors because of the addition of an implicit government guarantee,and they are in a special position in Chinese bond market.However,in recent years,with supply-side reforms and the elimination of zombie companies,bond defaults by state-owned enterprises have become more and more common,and the government’s willingness and ability to seek debts of state-owned enterprises have weakened.In 2020,there was a wave of defaults by state-owned enterprises,which has had a great impact on the market.However,due to the short development time of our country’s bond market,the measurement method of default risk,the risk prevention mechanism and the disposal of bonds after default are not perfect.How to carry out the bond default risk analysis with the characteristics of Chinese state-owned enterprises is worthy of attention and research.Brilliance Group has assets of up to 190 billion yuan and is the largest state-owned enterprise in Liaoning Province.However,due to the failure to pay the 1 billion yuan private placement bonds on time,a series of cross-defaults of bonds were triggered,and finally went into bankruptcy and reorganization procedures.It attracted widespread attention.This paper takes Brilliance Group as the research object :Firstly,I sort out the equity structure of Brilliance Group and the process of Brilliance Group’s default events,and summarizes the use of funds raised by its 14 defaulted bonds;Secondly,the paper analyzes the causes of Brilliance Group’s bond default risk from two aspects: external factors and internal factors.The main reasons for its bond default risk are as follows: financial deleveraging and policy supervision,macroeconomic downturn,auto industry Against the background of the recession,coupled with the blind belief in the market’s "rigid redemption" and "implicit guarantee",the bond market rating mechanism is not perfect,and the risk of bond default is rising.In addition,Brilliance Group relies too much on its subsidiaries,and its own brand core competitiveness is insufficient.Over-reliance on debt financing,short-term debt repayment pressure,deterioration of corporate cash flow aggravates the risk of bond default.Thirdly,through the comparative analysis of the relevant data of the parent company’s statement and the consolidated statement,it is found that although the Brilliance Group has included BMW Brilliance in the consolidated statement,it cannot fully control the internal resources of BMW Brilliance.Therefore,this paper analyzes the financial data of parent company’s report,and uses the Z-score model to predict the bond default risk of Brilliance Group.Accuracy is higher than based on consolidated reports.Finally,it summarizes the bond default cases of Brilliance Enterprises,and provides suggestions from the perspective of the enterprise,the bond market and the investors.And this paper proposes that when analyzing companies such as "strong subsidiary and weak parent",it is necessary to recognize the essence,measure the default risk from the perspective of the parent company’s statement,and provide a reference for similar companies and bond default research.