People vote for 'a technical default' exposure 'borrow the new and old' model is unsustainable

After the Spring Festival, known as China's largest private investment group of people in unleashing & other Default & throughout; The wave. On February 12th, the people vote for application of three corporate bonds listed on the Shanghai stock exchange to suspend trading bidding system. In the previous 10 trading days, the people cast & issued by the other; 17 the people throughout the G1 &; Bond prices halved and 3 billion yuan bonds appear & other; A technical default & throughout; 。 In facing the huge pressure of debt, the people made its most profitable real estate companies of the people jia industry equity has been the judiciary freeze.

why people vote in bond prices plunge, technical default scene? Investigate its reason, is inseparable from the & other; Financial de-leveraging & throughout; The big background, but more major problems or in itself.

in the first place, to enter in industries with excess capacity, is likely to be the people vote in technical default. People vote was established in August 2014, led by the national federation of industry organization, 59 well-known private enterprises established in 2018, assets reached more than 3000 one hundred million yuan, is worthy of the name of the investment community & other; The big MAC & throughout; , called & other; The Chinese version of Morgan Stanley & throughout; 、“ Folk version of cic & throughout; 。

in the people's investment philosophy is cast & other; With melting & throughout; To the financial means to support the development of the real economy. But many people threw into the investment field in industries with excess capacity. People vote in the original idea was that the business concentrated light volt, steel, shipbuilding and other overcapacity, Japan nor too & other; Passion & throughout; Industry, through the integration of restructuring to mastery, and then to share dividend repricing. In the photovoltaic industry is the people for the first & other; Move later & throughout; And cast. In June 2018, called & other; Throughout history the most severe &; Photovoltaic introduced the New Deal, temporarily not arrange general index of photovoltaic power station, distributed photovoltaic index control in 10 gigawatts (gw), part of photovoltaic power generation project subsidy cut new was put into operation, a series of policy mix to feel the chill photovoltaic industry. In the end, the people for participation in the large amount of investment in the field of photovoltaic (pv), aviation effect is not as good as expected.

second, highly indebted operation is also a weakness. In recent years people running in the fast lane. In 2014, the total assets of 564. 4. 4 billion yuan; In the first half of 2018 total assets has surged to 3096. Increase of 5. 1 billion yuan, 4 times. In the rapid growth of assets at the same time, the debt ratio is rising fast, as of September 2018, 74. 89%, the total debt of about 232. 8 billion yuan. In July 2018, a credit rating report, credit points out that in the new century, a rating agency, & other; People in the use of capital and debt leverage to push the strategic investment and industry consolidation, debt levels rise quickly, has accumulated a large debt rigidity & throughout; 。

the third, & the other; Borrow new debt is debt & throughout; Model test. In the company's $232. 8 billion debt, accounted for 62% of current liabilities. Among them, the short-term borrowing 39. 8 billion yuan, 21. 4 billion yuan other payables, non-current liabilities due within one year of 43 billion yuan, companies are facing greater short-term debt service pressure. In 2018 is the peak to the maturity of bonds, the people vote for basic take & other Borrow new also old & throughout; Mode, super lines of short-term financing bonds registered 10 billion yuan, almost all financial institutions to repay loans, due ultrashort harmony; Corporate bonds to raise basic also is used to pay off debts. In 2019, people under 198. The pressure to the maturity of bonds in 0. 5 billion yuan.

issued documents show, because the people vote for part of the stock of debt maturity not renew, a net outflow of cash flow of the financing activities of 145. 1. 3 billion yuan. Cast, said the people in the money market financial institutions have a certain degree of contraction, make the market cost of capital increase, the pressure will increase company's indirect financing, may affect the development of its business.

previously, a number of private enterprises, rely on short-term debt issued by constantly rolling short-term debt to support long-term investment, once stop rolling, the liquidity pressure was highlighted. Flush with cash in a credit market, the enterprise will feel short debt costs are lower, but ignored the safety of the debt structure.

in the current financial & other; To leverage & throughout; Under the background, & other; Borrow new also old & throughout; Model is hard to continue. The people vote in & other; Default & throughout; The wave, on the exposed the & other; Borrow new also old & throughout; The mode of unsustainable. Therefore, regulators should be strictly controlled bond issuance deadline problem, cannot allow enterprises to short-term debt raised in long-term projects.

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