Research On The Causes Of Bond Default And Preventive Countermeasures Of Suncity Group

Since China’s bond market broke the "rigid payment" in 2014,bond defaults have become increasingly serious,the number of defaults has continued to rise,and defaults have become more and more common,from private bonds to other bonds,from private enterprises to central enterprises,the scope of bond defaults has become wider and wider,indicating that bond defaults are dispersed.In addition,many defaulted bonds are issued by large corporations,especially their high credit ratings,making bond defaults more pronounced.On the whole,since 2017,the bond market is not optimistic,and the default trend is rapid and has a greater impact.What factors have contributed to the high level of default in China’s bond market? What steps should companies take to effectively reduce the risk of default? Especially real estate enterprises,why do so many real estate companies default on bonds? Based on the above problems,this thesis takes Suncity Group,a real estate enterprise with a large default scale and amount,as an example,based on theories such as information asymmetry theory,financial distress theory and broken window theory,and adopts literature analysis method,model analysis method,qualitative and quantitative combination of analysis methods to construct a framework for studying bond default,and conduct in-depth research on the causes of bond default,early warning and countermeasures of credit risk,and conclude this thesis.Therefore,the study of this case can help China’s real estate enterprises prevent the risk of bond default and promote the healthy development of enterprises.Through the analysis of the entire default process of Suncity Group,it is found that the bond default of Suncity Group is caused by both internal and external factors,of which the internal reason is the main reason and the external reason is the secondary reason.The internal reasons are mainly aggressive strategy,excessive capital investment,poor financial status,mismatch of debt structure,unreasonable term of long-term and short-term liabilities,and excessive equity pledge ratio have brought huge financial pressure and operating pressure to Suncity Group.External reasons include macroeconomic downturn and deterioration of financing conditions,tightening policies and slow cash return,making capital turnover difficult,resulting in cash flow problems,flaws in credit rating methods,inflated ratings,and many rating agencies have problems such as favor ratings and imperfect rating systems.In this regard,this thesis constructs a relevant credit risk early warning model for the bond default case of Suncity Group,aiming to achieve the role of risk early warning through the early warning model,and then enable Suncity Group to improve the risk management system.Through the comparison results of the Z-score model,the F-score model and the KMV model,the experimental research is more scientific and comprehensive,and then according to these experimental data,it can be further compared with the results of the rating agency,so as to judge whether these models are forward-looking and practical.The results show that the KMV model has a good overall effect and has good forward-looking and practicability.Finally,this thesis proposes relevant countermeasures based on the problems and the results of the credit risk early warning model.First,at the regulatory level,relevant departments should improve the information disclosure system,strengthen institutional norms,and can alleviate the financing difficulties of enterprises through a series of measures,learn from the banking and insurance system,establish a bond insurance system,etc.,credit rating agencies should improve the credit rating system and introduce a "dual rating system" to improve the independence of rating agencies.Second,at the industry level,adjust the operation model,transform the high-leverage model of the industry,and formulate a stable development strategy.Third,at the enterprise level,enterprises should scientifically formulate business strategies,improve financial management levels,strengthen corporate governance,optimize equity structure,maintain the effectiveness and independence of internal supervision of the company,establish an effective financial early warning mechanism to prevent bond default risks,in addition,enterprises should always remind investors to improve risk control awareness,make decentralized investment,and improve the ability to track and judge after the fact.It is hoped that the above suggestions and countermeasures will be helpful to Sunshine City Group and other enterprises in the entire bond market.