Research On The Financing Risk Of Languang Development High Leverage And Financing Agreement Of Share-based Debts

In recent years,China’s real estate market has developed rapidly,more and more real estate enterprises in order to develop rapidly and leverage rapid expansion,after the introduction of relevant national regulatory policies,in order to circumvent regulation and supervision,and financial enterprises to promote the "Financing Agreement of Share-based Debts" financing model to continue financing expansion,leverage for enterprises is both an opportunity and a risk.Therefore,based on the perspective of financing risk,this paper studies the motives,risks and impacts of the financing of high leverage and "Financing Agreement of Share-based Debts" of Languang development based on the case of rapid rise and decline of Languang development,and provides some forward-looking suggestions and enlightenment for regulators,real estate enterprises,financial enterprises and investors.First of all,by sorting out the national regulatory policies on the real estate industry,the automatic causes of Languang Development’s use of high leverage and "Financing Agreement of Share-based Debts" expansion are analyzed: high leverage expansion is firstly for faster development to seize the market,and second,to obtain more returns.And the motivation for the expansion of "Financing Agreement of Share-based Debts",one is because of loopholes in supervision and there are blind areas in the law,the second is the business model of blue light development and the drive of national regulatory policies,due to the particularity of the real estate industry,enterprises purchase land and subsequent development,need a steady stream of financial support,so that enterprises have a large number of capital needs,before the state has not introduced relevant policies,most real estate enterprises development mode is to first buy a piece of land,and then take the bank as collateral,mortgaged funds continue to buy land,and so on,However,real estate enterprises developed in this way can only rely on borrowing new to pay off the old to ensure the normal operation of the enterprise,once the capital demand is not met and the capital chain of the enterprise is broken,it may lead to the bankruptcy of the enterprise.With the introduction of the state’s regulation and control policies for the real estate industry,the threshold for financing of real estate enterprises has been raised,and the capital needs of real estate enterprises have not been met,and they have begun to look for ways to hide debts to meet financing conditions and continue to finance,so as to give birth to "Financing Agreement of Share-based Debts",that is,investment in the form of equity but essentially signed a contract similar to the debt of guaranteed principal and income,on the one hand,this financing model can help real estate enterprises transfer liabilities off-balance-sheet,reduce the asset-liability ratio,and optimize financial statements.Reduce financial pressure.On the other hand,financial institutions can also use this model to circumvent regulatory lending restrictions and obtain high returns.This financing model satisfies the interests of real estate enterprises and financial institutions,but it is actually a financing model with higher cost and higher risk.The high-leverage expansion is already facing huge financial pressure,and at the same time,the "Financing Agreement of Share-based Debts" operation with higher financing costs has been carried out,and the huge debt pressure has seriously affected the operation of Languang Development.Eventually,due to internal control mechanisms,insufficient cash flow and other factors,the debt defaulted,and then the credit rating was downgraded,and since then it has begun to decay.