How to deal with bond default

It is common for listed companies to issue bonds. It is better for a company to borrow money from investors in the name of bonds and repay the principal and interest after maturity than to borrow money from banks. Most bonds issued by listed companies are paid on schedule, but there are also many defaults.

How to deal with bond default?

You can claim compensation from the guarantor, but it is not recommended to do so directly. Let's look at the company's solution to breach of contract first. If it is within your acceptable range, you can handle it peacefully with the company. If the solution given by the company is not what you want, you can ask the guarantor for compensation or file a lawsuit. After all, the relevant contract was signed when buying bonds. Let's see what the terms in the contract are.

Two trading channels of corporate bonds after default;

1 Bonds are traded after suspension due to default, and can also be sold at a discount after default.

There is an anonymous trading platform, and transactions are made by public auction and bidding. On the one hand, it can save the seller's face, on the other hand, it can let the buyer participate in the competition, and it can also improve the liquidity and price transparency of "negative default bonds".

Suggestions on how to deal with the default of bonds:

Independent negotiation: it is to negotiate with the company and work out a plan acceptable to both parties.

Arbitration: In case of breach of contract, the arbitration clause shall apply.

Judicial litigation: because of the long litigation time, bondholders will definitely suffer.

In fact, before buying bonds, we should have a comprehensive understanding of the company that issues bonds, see if there are any cases of bond default in the history of this company, and then look at the company's performance and strength.