Research On The Causes And Economic Consequences Of Yango City Bond Defaults Based On Liquidity Perspectiv

With the development of China’s capital market,the financing channels of enterprises have more channels to raise money,and bonds have become one of the main sources of capital acquisition for enterprises.In recent years,affected by the weakening of macroeconomic growth and the COVID-19 epidemic,the industry environment has deteriorated,which made enterprises have a poor profitability.As a result,they are more dependent on external financing.The liquidity situation of some enterprises has deteriorated,and the bond default rate has been rising,shaking investors’ confidence in the capital market.For realty business,it is easily influenced by external environment and usually needs lots of funds.In recent years,intensified competition and tightened policy restricted the development of the industry and lead to a higher bond default rate.The phenomenon of bond default indicates that some problems exist in the management of Chinese enterprises.Detailed analysis of the causes and economic consequences of bond defaults is helpful to reduce defaults,restoring the confidence of investors and creditors,regulating the pace of development of enterprises and the bond market at the same time.Starting from the perspective of liquidity,this paper selects the bond default event of Sunnyside Group as a case,then analyzes the causes and economic consequences of breach of contract by means of comparative analysis and event study.This paper first sorts out the case enterprises and the time point of default,and then analyzes the causes and adverse effects of default event,and comes to these conclusions: The reason for the default event of Sunnyside Group is the lack of liquidity;The operating income of Yango City Group is not enough to cover the capital demand which made the company excessive reliance on debt;The weakening of macro-economic growth,the downward development of the real estate industry and the deleveraging policy are all factors leading to the default of Sunny City.The company did not timely adjust its business strategy,and the continuous reduction of working capital led to the liquidity problem of the company,which made it have not enough capital to cover the principal and interest of the bonds;Bond defaults not only lead to a decline in the company’s stock price,but also aggravate investors’ distrust of the company due to damaged credit.The cross-clause accelerates the maturity of other debts and increases the pressure on enterprises to pay their debts.The financing of enterprises in the same industry has deteriorated further,and the delay of the credit rating system is prominent.Based on this,this paper puts forward the following suggestions: First,it is suggested that enterprises improve the internal liquidity environment,adjust the capital structure,enhance the profitability to increase the capital inflow,and pay attention to their own liquidity management.Second,it is suggested to actively respond to changes in external liquidity,establish a risk early warning mechanism,develop appropriate competitive strategies on the base of entertainments’ business conditions and external threats,and establish a risk-resistant funding system.