Study On The Influencing Factors And Effect Of Valin Group's Convertible Debt Issuance

In the 1970s,Exchangeable bonds first appeared in the American market as a new financing tool,it is a special class of Convertible bonds,which can not only enrich the capital market financing channels,but also expand the financing options of non-listed companies.However,due to the slow development of China's financial market,Exchangeable bonds were introduced late,much of the existing research has been borrowed from the Convertible bonds,which has a relatively narrow scope and limited content compared with foreign countries.But along with the rapid development of the domestic market and the guidance of the policy in the recent years,Exchangeable bonds have been favored by more and more large shareholders of listed companies since its functions of low interest financing,steady reduction and capital arbitrage.Therefore,this paper will select the specific case of the public offering of Exchangeable bonds by Valin Group,analyze its basic terms and special terms,study the impact of its issue and the effect,which can enrich the existing research on the public issuance of Exchangeable bonds to a certain extent.In the first part,this paper reviews the previous research related to Exchangeable bonds,focusing on the influencing factors,economic consequences,terms and pricing analysis at home and abroad,and analyze the possible risks in the process of the issuing.In the case study,this paper introduces the case issuer,Valin group,from the industry background and the company's operating condition,then it introduces the terms of the bonds and the rationality of pricing,as well as risk in the process of issuing and method to deal with risk.Secondly,this paper analyzes the factors that influence the issuance of bonds from the points of low-interest financing,steady reduction and capital arbitrage.The low interest financing angle mainly consider that the enterprise has fund demand and need to extend financing way as well as reduce financing cost.The smooth reduction angle mainly unifies the bond clause design to carry on the analysis.And the capital arbitrage is to consider the issue of its bonds after the targeted additional issuance.Then,this paper mainly analyzes the effect of successful bond issuance from the perspective of issuers and bondholders.The issuer aspect mainly considers the impact on the issuing enterprise and the underlying stock.For bondholders,this paper analyzes the income of investors in different situations.At last,the paper summarizes above analysis and gives corresponding suggestions to bond issuers and investors.Through the above analysis of the case of Valin exchangeable bonds,it can be concluded that for the issuers,issuing Exchangeable bonds has opened new financing channels,which can not only reduce the financing cost,but also obtain more highquality financing.Meanwhile,it can also activate long-term stock assets and increase liquidity.Furthermore,under the premise of guaranteeing the issuer's control over the subsidiary,the Convertible bonds can make the stock market more stable.In addition,the issuer of Exchangeable bonds can also arbitrage in combination with directional issuance of new shares.For investors,investment in Exchangeable bonds can not only gain capital preservation income,but also have the chance to obtain the excess return from stock exchange.But for the underlying stocks,the issuance of Exchangeable bonds will inevitably send signal to the market that big shareholders will reduce their holdings,thus cause the volatility of the underlying stock market,and the negative effect of the second issue of exchangeable bonds will be more obvious than the first issue.