Bonds Default Risk Assessment And Cause Study Of Sichuan Languang Development Co.,Ltd.

With the continuous development of China’s bond market,issuing bonds has gradually become an important financing method for enterprises.At the same time,the default risk of bonds is also exposed.In 2014,the default of "Chaori bonds" broke the myth of rigid payment in China’s bond market,and in 2018,"H6 Hong Bond 02" issued by Zhonghong Holding Co.,Ltd.became the first real estate default bond in China.In recent years,under the control of national policies,the financing channels of Chinese real estate enterprises have been narrowed and financing restrictions have been strengthened.In addition,in the new normal stage of economic development,the national macroeconomic downward pressure,coupled with the impact of the epidemic,many real estate enterprises occurred liquidity shortage,resulting in the inability to repay the principal and interest of bonds,constituting a substantial default.A wave of default has broken out in China’s real estate sector.Based on the above background,this paper selects Sichuan Languang Development Co.,Ltd.,a real estate enterprise with the largest number of bonds default in 2021,to conduct research,assess the risk before Sichuan Languang Development Co.,Ltd.bonds default,and explore the causes of the evolution of its default risk into real risk,hoping to provide reference significance for relevant entities such as China’s real estate enterprises,credit rating agencies and regulators.This paper uses case analysis,literature research,qualitative and quantitative methods to carry out research,first defines the relevant concepts and elaborates the theory of term matching,tradeoff theory,information asymmetry theory;Secondly,it analyzes the current situation of bonds default in China’s real estate industry and introduces the case of Sichuan Languang Development Co.,Ltd.bonds default.Thirdly,the default risk of Sichuan Languang Development Co.,Ltd.is evaluated based on Z-score model and KMV model.Then it explains the formation path of Sichuan Languang Development Co.,Ltd.bonds default risk and analyzes the causes of the evolution of Sichuan Languang Development Co.,Ltd.default risk into real risk from both internal and external aspects.The external aspect mainly analyzes from three aspects: macroeconomic downturn,stricter industry supervision and credit rating distortion.The internal level is mainly analyzed from four aspects: poor governance structure,lack of risk awareness,radical development strategy and deteriorating financial situation.Finally,the research conclusions of this paper are obtained and relevant suggestions are put forward.The conclusion of this paper is that the radical development strategy and the maturity mismatch of assets and liabilities are the fundamental reasons for the default of Sichuan Languang Development Co.,Ltd.bonds;A deteriorating financial position is a potential reason for Sichuan Languang Development Co.,Ltd.bonds default;Insufficient cash flow of financing activities is the direct cause of Sichuan Languang Development Co.,Ltd.bonds default;Poor governance structure accelerated the process of Sichuan Languang Development Co.,Ltd.bonds default;Macroeconomic downturn,tighter regulatory policies,credit rating distortion are the incentives for Sichuan Languang Development Co.,Ltd.bonds default.On the basis of the causes of default discussed above,the paper puts forward relevant suggestions: real estate enterprises should optimize the governance structure,enhance the risk awareness,and improve the development strategy;Credit rating agencies can adopt differentiated rating methods and improve rating quality by paying investors.Regulators should do more to regulate banks’ mortgage lending and do more to regulate rating agencies.