Research On Listed Companies' Finance By Convertible Corporate Bond

Convertible bond is a new financial instrument which based on corporate bonds and permit the holder convert the CB (Convertible Bond) into a normal stock issued by this corporation. In the international capital markets, convertible bond is a mixed derivative financial instrument, which has some advantages and functions that both bonds and stocks have. Then it overcomes and retrieves the connatural limitation of single functional financial instrument, and fully adapts the behavior of dynamical demand of the financiers and pursue the maximal profit of the investors. Right now it is a very popular financial instrument in international capital market.In 1843, the Erie Railway Company in the New York, USD, issued the first convertible company bond in the world. From then on, the convertible company bonds have formed a huge family with many species and extensive use. With the new financial tools created, a large number of new convertible company bonds will appear. Compared with this, the capital market in China is still young and childish, and the convertible company bonds are only introduced in not long before, whether from the aspect to optimize the structure of capital market or from the aspect to develop enterprise's financing channels, it's necessary to develop convertible company bonds in effort.Many years Chinese state-owned enterprises had faced the conflict between the shortage of capital and the singleness of financing channel. With the reform Process of Chinese market economy and the intensity of competition, one of the most important task for the enterprises is financing with multiply channels and low cost. From a macro perspective, Chinese securities market can be further diversified with a mounting number of listed companies financing through convertible bond. Not only the financing channels have been increased, but also the items of investment in security market have been enriched. From a micro perspective, convertible bonds financing is greatly appealing to the underwriters due to its lower cost of financing, premium issuance, deferred equity dilution and its good effect on the optimization of capital structure. Meanwhile, it also provides the investors with stable income of interest, payment of principal, and the possible value addition of equity as well. Therefore, convertible bonds financing have attraction to listed companies.