Research On The Influencing Factors Of China’s Bond Default Risk Under The Impact Of COVID-19

In 2014,the first default bond in China was a significant turning point in developing China’s bond market.Since then,bonds default occurred frequently,and the amount of default has quickly increased,which exposed more and more risks,and China’s bond market has brought a certain degree of negative impact.At the end of 2019,the COVID-19 outbreak in China,which not only hurts the GDP,the production and consumption index and other macroeconomic indicators but also has a significant impact on China’s real economy market and financial market.Also,it has had a vicious effect on global economic development,and the global economy has begun to show a downward trend.Specifically,China’s bond market has also been affected.In the context of the overall control of COVID-19,there may be scattered spread on a small range,so it is necessary to study the impact and transmission of COVID-19 occurrence on China’s bond default.By researching how the COVID-19 affects production and operation,enterprises can promote their capability to resist the COVID-19 attacks and make timely targeted adjustment policies to reduce the risk of bond default effectively.Firstly,this paper chooses the data of Chinese A-share companies from 2014 to 2020 and selects COVID-19 and relative indicators of defaults bond and financial indicators,a total of 24 variables as explanatory variables,with whether the bond default,bond credit rating level,and bond credit spread as three explained variables.Then,create a binary Logic regression model,a multi-order logic regression model,and an OLS linear regression model,including COVID-19,coupon rate,current ratio,year-on-year increase in net profit and year-on-year growth rate of total assets,significantly affect the risk of default,and LASSO regression shows to be robust.Secondly,the method "Differences-in-Differences" is used to explore the mechanism of COVID-19 and bond default.The result shows:1)the COVID-19 has a significant direct impact on corporate bond default of listed companies in China;2)the COVID-19 has an indirect impact on bond default by affecting coupon rate,current ratio,net profit growth rate and year-on-year growth rate of total assets.Finally,this paper puts forward some suggestions on preventing the risk of bond default in the post-epidemic era.