Analysis of the Causes of Baolong Real Estate Bond Default

Junhao Lei

doi:10.54097/kbqm8g13

Authors

Junhao Lei

DOI:

https://doi.org/10.54097/kbqm8g13

Keywords:

Real estate enterprises, Bond default, Reasons for breach of contract, Risk analysis

Abstract

The real estate industry, as a pillar industry of China's national economy, plays an important role in the development of the economy and society. However, in recent years, due to the impact of the epidemic and the tightening of industry regulation, credit risks in the real estate industry have begun to accelerate exposure. Since 2021, there have been frequent defaults on real estate company bonds, and the scale of defaults has rapidly climbed to the top of the industry. Therefore, in-depth analysis of the reasons behind the wave of defaults by real estate companies has become an important issue that urgently needs to be addressed. This article takes Baolong Real Estate as the research object to explore the causes of its bond default. Research has found that: The fundamental reason for the default of Baolong Real Estate bonds lies in the company's operational strategy mistakes and neglect of debt management. The company's heavy holdings in the third and fourth tier real estate markets, coupled with an increase in commercial real estate, have weakened the company's profitability and operational capabilities. In addition, the company's asset liability ratio is too high and there is a problem of mismatched debt maturity. After entering the centralized redemption period, under the dual pressure of tightened external financing environment and hindered internal sales collection, bond defaults ultimately occurred.

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