Debt financing is an important way for enterprises to raise funds, which can meet the capital needs of enterprises in the process of mergers and acquisitions. With the continuous development of the economy, corporate debt financing has the characteristics of internationalization and is also facing greater risks. Specifically, the risk of corporate debt financing is mainly manifested in the following four aspects.

◆ Bank credit risk

Bank credit is an important way to finance corporate debt. After granting loans to enterprises, banks can participate in corporate governance as creditors, interfere in the operation of enterprises, and protect the creditor's rights and assets of enterprises. However, due to the possibility of moral hazard in financing enterprises, it may deceive banks through information falsification, and the banks are unable to assess the value of creditor's rights assets in a timely and accurate manner, so they cannot effectively control the risks.

◆ Commercial credit risk

As a type of short-term liability, commercial credit financing is closely related to the specific transaction behavior of enterprises. Before the transaction, the type of risk, the probability of risk occurrence and other matters can be basically clarified, so the agency cost of this financing model is relatively low. However, because commercial credit financing is relatively scattered and the amount of a single transaction is relatively small, creditors cannot hold too much equity of the enterprise, cannot intervene in the operation activities of the enterprise, and are in a passive position in the management of the enterprise. Even if creditors find that the company is misusing credit funds, they will not be able to intervene effectively.

◆ Entrusted loan risk

Entrusted loan refers to the provision of funds by government departments, enterprises and institutions, other economic organizations and individuals, etc., clarifying the loan object, loan amount, loan term, loan interest rate, use of funds and other matters, and the financial institution issuing the loan on behalf of the financial institution, and supervising the use of the loan, so as to provide assistance for the loan recovery. In this process, the financial institution provides services to both parties and charges a certain fee, and the risk is entirely borne by the principal.

◆ Project financing risk

Project financing is a series of financial activities carried out to meet the needs of a project. In project financing, the borrower uses the project assets as collateral to obtain funds, and uses the funds owned by the project to record the proceeds to repay the loan, regardless of the general creditworthiness of the project entity. Specifically, there are two ways of project financing, one is non-recourse project financing and the other is limited recourse project financing.

Non-recourse project finance is also known as pure project finance. Under this type of financing, the financier mainly uses the operating income of the project date to repay the principal and interest. At the same time, in order to protect its own interests, the lending bank will require to obtain a security in rem. If the project fails, its assets or earnings cannot be repaid and the bank has no recourse.

Limited recourse project financing means that the lending bank requires not only the security in rem of the project, but also the security provided by a third party other than the project entity. If the project fails to create or operate, the guarantor must repay the loan up to the amount of the guarantee. If the guarantor refuses to pay the loan, the lending bank has the right of recourse.