Research On The Effects Of Convertible Bonds Issued By SCTE

As an important basic energy industry in the reform and opening-up,power industry is closely related to the development of economy,and the three main industries are inseparable from the supply of electricity.Among them,the listed companies in power industry,as typical representatives of capital-intensive enterprises,have the characteristics of huge investment,long project cycle and stable income,so they also have strong refinancing demand.Convertible bond,as a kind of mixed financing method with equity,bond and option,has got some development space in China in recent years.In February 2017,the CSRC revised the "Listed Companies Non-public Issues of the Implementation of the Rules," the issuance of seasoned equity offerings and allotment has been greatly restricted,directly resulting in a fountain-like growth of the number of convertible bonds issued and the size of the release.The listed companies of electric power industry always have the demand of refinancing after the IPO,and whether the convertible bonds can replace the bank loans and the private placement is the most concerned problem in this paper.The main research object of this thesis is Sichuan Energy CO,.LTD(Hereinafter referred to as Sichuan Energy),a listed company of Sichuan Provincial Investment Group Company Limited,mainly operating with power development,electric power production and operation.In March 2011,Sichuan Energy publicly issued 2.1 billion convertible bonds,which are used to invest the Ertan hydropower station.The thesis introduces the research background,research purpose and significance,research methods and contents.And then,there would be some relevant theoretical studies about the issuance motivation and financing effect of convertible bonds,which provide theoretical support for the latter content.In the case study section,firstly,the paper briefly introduces the background of Sichuan Energy before issuing convertible bonds,and laid the groundwork for investment in hydropower projects.Secondly,by emphasizing the importance of the Ertan hydropower investment project and the financial condition of the company,the thesis analyzes the motives why Sichuan Energy prefered issuing convertible bonds.Then,there will be a brief overview of the whole process of the convertible bonds from issuing to the delisting,and then use the event research method to analyze the stock price changing among the issue announcement date,in order to inquire whether the issue of convertible bonds has brought benefits to the company.From the direct income of investment projects and the economic Value added method,the paper analyzes the influence of issuing convertible bonds on company.Considered in the equity structure,it is believed that the convertible bond can play a certain role in the optimization of equity.At the end of the paper,the results of the case study are summarized,and the relevant conclusions and enlightenments are drawn.Sichuan Energy regards convertible bond as a kind of delayed equity financing,which results in slowing down the degree of dilution.Also,the low interest rates and the features of converting in potential will let listed companies exempt from high financial costs and reduce the chance of falling into financial distress.After the issuance of convertible bonds,in a short time,Sichuan Energy gained positive cumulative abnormal return with announcement effect.And in the long term,the company had obtained a huge return on profits.In the meanwhile,the shareholding structure of Sichuan Energy has been optimized,and the scene of one single large shareholder was remissed,which has responded positively to the call of the country's mixed ownership reform.Therefore,the article proposes that,with the frequent financing needs,the same type of listed companies as Sichuan Energy could consider issuing convertible bonds as,and with a variety of financing methods to achieve diversified financing.