Research On The Causes And Prevention Of Bond Default Of Xinli Holding Group

In the past few decades,China’s economy rapidly develop,the bond market in China’s economic system is increasingly important.From 2018 to 2020,there were a number of private enterprise bond defaults,among which the Hengda thunderstorm incident attracted great attention from the market.According to data from People’s Bank of China statistics,by the end of 2021,China had issued a total of 6.138 billion bonds.In recent years,the scale of China’s bond market has been steadily expanding,and the total issuance of bonds has continued to increase,and the credit risk brought by it cannot be ignored.The characteristics of high risk,high return and high debt in the real estate industry are easy to lead to bond default events,coupled with the second half of 2020,China has introduced new regulations for the "three red lines" financing supervision for the real estate industry,prompting real estate enterprises to adopt internal "deleveraging" measures,and the real estate industry is facing great pressure.However,most of the current research on the causes and prevention of bond default cases takes large manufacturing enterprises and large real estate enterprises as examples,and there are few studies on the case subjects of medium-sized enterprises.In this context,this thesis selects Xinli Holdings Xinli Holdings(Group)Co.,Ltd.(hereinafter referred to as "Xinli Holding Group"),the first listed real estate enterprise in Jiangxi Province,as the research object,and the causes and prevention of bond defaults from the perspective of medium-sized real estate enterprises is representative to a certain extent.In this thesis,the literature research method is used to sort out the influencing factors of bond default,the economic consequences of bond default,and the measurement and prevention of bond risk,so as to clarify the research direction.Then,the definition and characteristics of bond default are defined,and then the common causes and risk prevention measures of corporate bond default are briefly sorted out.Then,using the case analysis method and comparative analysis method,the whole process and impact of the bond default event of Xinli Holding Group are studied,the real cause of the bond default is found,and targeted prevention suggestions are put forward.In the introduction part,this article elaborates on the entire bond default process of Xinli Holding Group,from the initial high premium land acquisition rapid expansion to form a huge debt,followed by frequent negative events such as the liquidation of the equity pledge of the major shareholder,and finally the inability to repay the mature debt leads to bond default.In terms of the negative impact caused by the bond default event,Xinli Holdings had difficulty in refinancing,frequent problems in related enterprises,the reputation of the corresponding bond underwriters was affected,bondholders sold Xinli bonds,and the company’s credit rating declined.The occurrence of the default of Xinli Holding Group is of course driven by external factors,such as economic normality and credit environment that has prompted the tightening of the financing environment,the national policy on the real estate industry and the lightning explosion event in the same industry have reduced the development speed of the industry,and the emergence of the new crown epidemic has reduced the demand and supply of housing,but the most important thing is that there are problems at the strategic,financial and corporate governance levels within Xinli Holding Group.Although Xinli Holdings has made adjustments according to the "three red lines" policy,its expansion strategy is too aggressive,frequent high-premium land acquisition crowds out funds,and there are problems of large scale of interest-bearing liabilities,low solvency,low profitability and some financial data manipulation at the financial level;the departure of core executives at the management level of the company and the lack of an effective risk early warning mechanism.In view of the above problems,this thesis suggests optimization and prevention from the following perspectives: Xinli Holdings needs to change the aggressive land acquisition expansion model,seek stable development,reasonably reduce the leverage ratio,optimize the overall financing structure of the enterprise,improve the traditional high turnover model,and seek transformation.Xinli also needs to optimize the project layout and sales model,establish a special risk management and control department,and strengthen risk prediction capabilities.Investors should also attach importance to post-investment management and improve their awareness of risk identification,and regulators and third-party rating agencies should adopt diversified standard credit rating mechanisms,strengthen rating independence,and improve the regulatory system of rating agencies.Finally,this thesis draws research conclusions and enlightenment based on previous theories,hoping that through the analysis of the case of bond default of Xinli Holding Group,it can give some reference significance to real estate enterprises in Jiangxi Province,help other local real estate enterprises in Jiangxi Province summarize experience,and lay a foundation for these enterprises to better promote the overall economic development of Jiangxi Province.