The Analysis On The Motivation And Economic Consequences Of Private Placement Exchangeable Bonds Issued By Tunghsu Group

Exchangeable bonds originated in Europe and the United States in the 1970 s,but later appeared in our country.In order to solve the "big and small" problems in the non-tradable share reform,on September 5,2008,the Securities Regulatory Commission issued the “Exchangeable Shares of Listed Company Shareholders”.The provisions of corporate bonds(draft for comment),then the exchangeable bonds formally entered the market,but the issuance on the bond market was not smooth.On July 13,2009,Health Yuan announced a plan for exchangeable bonds,and plans to issue 700 million Livzon Group's exchangeable bonds,but finally ended in failure.Until October 1,2013,the first exchangeable private placement bonds —13 Fuxing bonds were issued,which opened the prelude to the issuance of exchangeable private placement bonds in China.Since 2014,the number and size of exchangeable bonds have grown rapidly as the China Securities Regulatory Commission continues to clarify and improve the relevant provisions of the exchangeable bonds.Under the background of revitalization of stock,shortage of assets and new regulations on reduction of shares,this product was highly praised by the market.Up to November2016,the stock of exchangeable bonds was 184.1 billion yuan,of which 127.7 billion yuan were private placement exchangeable bonds and that exchangeable of public bonds 54.4 billion yuan.Private placement exchangeable bonds are more welcomed by the market because of their lower threshold and higher efficiency.However,it must be noticed that China's exchange-traded private equity market is still in a relatively backward stage,both by issuers and investors.Neither is fully in place and can not fully exert its full effect.As an emerging financial instrument,private placement exchangeable bonds not only have the function of low-interest-rate financing,but also have the function of reducing holdings,and can achieve the purpose of arbitrage through the combination of private placement exchangeable bonds and directional seasoned offering.Since private placement exchangeable bonds are still in their infancy,there are still some loopholes in the development of exchangeable private bond rules,and there is no relevant policy to disclose the contents of the disclosure of these factors,which have brought arbitrage space for private placement exchangeable bonds.As one of the earliest successful issued private placement exchangeable bonds in China,private placement exchangeable bonds issued by Dunghsu Group not only helped the issuers to participate in the private placement with a low price,but also brought the enterprises Huge benefits after the exchange of private placement bonds,although it brings interests to the issuing shareholders,but it has damaged the interests of minority shareholders,and it is a great warning to us.Based on a large number of research results at home and abroad,this paper takes private placement exchangeable bonds issued by Dunghsu Group as an example.First,the article elaborated on the research significance and research background of this article,and then reviewed domestic and international actions and economic consequences of the exchangeable private placement bonds.And pricing research.Second,review the relevant theories of private placement exchangeable bonds.Thirdly,it introduced the whole process of Donghsu Group's issuance of private placement exchangeable bonds,and analyzed the reasons for Donghsu Group's issuance of exchangeable private placement bonds,including relieving the pressure on the group's funds,making the issuance procedures more convenient,disguised reductions,and the combination of fixed and increased bonds to take interest.Then,a detailed analysis of the economic consequences and causes of Donghsu Group's issuance of exchangeable private placement bonds was conducted.This article analyzes that Donghsu Group's issuance of exchangeable private placement bonds took advantage of itself and harmed the interests of small and medium shareholders.Finally,this article draws conclusions of the case,and based on the case analysis puts forward suggestions to promote the development of private placement exchangeable bonds.The conclusion of this paper are as follows: the issue of exchangeable private placement bonds provides a convenient financing method for Dunghsu Group;directional seasoned offering in combination with exchangeable private placement bonds becomes the arbitrage tool of Dunghsu Group.It is hoped that other companies can learn from Donghsu Group and use exchangeable private placement bonds to ease the pressure on the Group's financing.At the same time,it hopes that the regulatory authorities will strengthen supervision and avoid arbitrage.