Research On The Causes And Risks Of Bond Default Of Real Estate Enterprises

The real estate industry is a pillar industry of China’s national economy,making significant contributions to the economy,finance,and people’s livelihoods.In recent years,with the continuous development of China’s real estate industry,the concentration ratio of real estate enterprises and the competitive pressure of the real estate industry are also increasing,and the "golden period" of industry development has passed.Especially since 2019,relevant departments have continuously adjusted policies to tighten the financing environment for real estate enterprises.For small and medium-sized real estate enterprises,their profitability is low.To continuously expand and develop their business scale,they choose to adopt a high-leverage operating model,and even adopt blind expansion strategies.Ultimately,due to the long-term problems of the enterprise and its poor management,there is a shortage of capital turnover liquidity,leading to bond defaults and even bankruptcy and delisting risks.This is a serious blow to investor confidence in the real estate industry.Therefore,studying the causes and default risks of bond defaults in Chinese real estate enterprises is a problem that must be faced by current Chinese real estate enterprises and the bond market.This article takes Sichuan Languang Development Co.,Ltd.as the case object for case research.Firstly,the literature research method is used to sort out the causes of bond defaults,default risks,default prevention,and relevant literature on real estate bond defaults,and to elaborate on the relevant theoretical basis.Secondly,through case analysis,introduce the situation of the case company,sort out the default process,impact of default,and subsequent handling of default.Then,the causes of bond defaults were analyzed from both external and internal perspectives,and through comparative analysis,the modified KMV model and Z-score model were used to measure credit risk and conduct financial warning analysis on the case enterprise.Horizontal comparative analysis was conducted with the Z-value of other comparable real estate enterprises to identify the industry position of Sichuan Languang’s Z-value,and relevant risk prevention and resolution measures were proposed for Sichuan Languang in terms of financing,internal governance,and finance.Finally,this paper draws the following conclusions and suggestions: Firstly,the external reasons for the bond default of Sichuan Languang are the macroeconomic downturn,the continuation of the COVID-19,and the impact of changes in the financing environment on the company’s operation and sales.The internal reasons are due to problems in the company’s internal management and finance,such as aggressive expansion strategies,frequent changes in management,an increase in the proportion of corporate equity pledges,an unreasonable asset structure,and a decline in financial capabilities,which have led to the company breaking out of contracts in the short term.Secondly,the revised KMV model and Z-score model can effectively quantify and warn against credit and financial risks.Among them,the Z-value of Sichuan Languang shows a significant downward trend compared to the same period last year,indicating that the Z-score model can accurately serve as a corresponding warning function.Thirdly,this article provides suggestions to real estate enterprises,relevant regulatory agencies,and rating agencies from a macro perspective,hoping to continuously improve risk warning mechanisms for the real estate industry to prevent bond default events.