The Case Analysis Of Evergrande Group Perpetual Bond Redemption

With the gradual development of society and economy,enterprises’ demand for capital is increasing day by day.Traditional debt forms can no longer meet the financing needs of enterprises.More and more enterprises begin to use new financing tools.The current market system is not sound,the use of perpetual debt can bring the market,enterprises what kind of opportunities and challenges,this topic is worth discussing.Real estate projects have a great demand for capital,and it takes a long time from project construction to final sales.It involves many related departments and industries,and the fees are complicated.As a capital-intensive industry,financing is an indispensable link.Evergrande group issued a large number of perpetual bonds from 2013 to 2016,achieving rapid development through financing.But in the first half of 2017,Evergrande group fully redeemed its perpetual bonds,a move worth exploring the underlying reasons behind.Therefore,this paper makes a comprehensive use of case study method,literature study method,event study method and scheme comparative analysis method to study the case of Evergrande group’s redemption of perpetual debt,analyzes its motivation and effect,and draws the corresponding conclusion and enlightenment to investors,other enterprises and regulatory departments.Firstly,this paper introduces the general situation of Evergrande group,the issuance situation of Evergrande group perpetual bonds and the whole process of Evergrande group’s redemption of perpetual bonds.Through the analysis of the general situation of Evergrande group,the issuance situation of perpetual bonds and the redemption process,the motivation of Evergrande group’s redemption of perpetual bonds is analyzed.Then,according to the motivation of Evergrande group to redeem perpetual debt,the effect of Evergrande group to redeem perpetual debt was further analyzed.Through the motivation and effect analysis of Evergrande group to redeem perpetual debt,the case of Evergrande group to redeem perpetual debt was reviewed,and the successful experience and existing problems of Evergrande group to redeem perpetual debt were summarized.Finally,the conclusion is drawn according to the overall case analysis process and the enlightenment to investors,other enterprises and regulatory authorities.Through the analysis of the full text,the conclusions are mainly as follows: Evergrande group redemption perpetual debt motivation is mainly to adjust the capital structure,reduce financial risk,to send a good signal to the market and increase the wealth of shareholders;Evergrande group’s redemption of perpetual bonds has an impact on capital structure,financial risk,market effect and shareholder wealth.Evergrande group redemptions perpetual debt problems mainly have part of the redeemed perpetual debt essence for debt replacement and liquidity risk increase.This paper aims to study the motivation and effect of redemption of perpetual debt through typical cases of Evergrande group,and provide basis for investment analysis of investors,business decisions of other enterprises and relevant policy formulation of regulatory authorities.