Research On The Motivation And Consequences Of Oil And Gas Companies Issuing USD Bonds

In recent years,Chinese-funded enterprises have actively issued US dollar bonds overseas,and the scale of bond issuance will reach US$960.8 billion in 2020.One of the reasons behind this trend may be that companies have an arbitrage motive,that is,using the positive domestic and foreign interest rate differentials and the forward premium trend of the RMB exchange rate to reduce their own bond issuance costs.But on the other hand,companies issuing USD bonds for arbitrage will cause currency mismatches in assets and liabilities,which may lead to losses in the context of large fluctuations in the RMB exchange rate.Therefore,it is necessary to identify the arbitrage motives of Chinese-funded companies issuing USD bonds,measure their arbitrage returns,and evaluate the financial consequences of their bond issuance,so as to comprehensively judge whether the company should issue foreign currency bonds with arbitrage motives.To this end,this article selects oil and gas companies with strong demand for U.S.dollars,huge bond issuance scale,mismatched assets and liabilities,and concentrated bond issuance as the research objects.Through a specific analysis of 48 companies issued by Sinopec,CNOOC and CNPC from 2011 to 2020 U.S.dollar bonds,identified three companies ' arbitrage motives for issuing U.S.dollar bonds,measured excess arbitrage returns and the financial consequences of issuance of U.S.dollar bonds,evaluated whether the three oil and gas companies reasonably used arbitrage opportunities,and gave specific points accordingly.Suggest.The structure of this paper is as follows: Based on the arbitrage theory and corporate bond issuance motivation theory,this paper first elaborates the issuance background and status quo of the issuance of US dollar bonds by three oil and gas companies.Secondly,a regression model was constructed for corporate arbitrage motives,financial indicators,and CTR indicators were used to identify arbitrage motives.The results showed that the three oil and gas companies have arbitrage motives for issuing dollar bonds,especially Sinopec ' s arbitrage motives.Furthermore,from the perspective of arbitrage income evaluation,this paper estimates the excess return of bonds that are about to mature by predicting the exchange rate of the renminbi.The results show that bonds with shorter maturities have obtained excess returns,while bonds with longer maturities do not.Obtain excess returns.Finally,the regression model is applied to examine the financial consequences of the issuance of three corporate bonds,and the results show that the issuance of US dollar bonds can significantly reduce the company's debt capital cost and financial expenses.The conclusion of this article shows that the bond issuance behaviors of the three companies are driven by arbitrage motives to a certain extent,and the arbitrage motive has the most significant impact on Sinopec.In the context of a relatively strong RMB currency,the three companies can obtain significant excess returns during their existence,and at the same time they have achieved better financial performance in bond issuance.In response to this situation,it is recommended that companies can use the domestic and foreign interest rate differentials and the long-term appreciation of the renminbi to arrange the issuance of US dollar bonds,thereby using arbitrage opportunities to reduce financial costs.When faced with exchange rate risks,foreign exchange derivatives can be used for risk management.