Research On The Economic Consequences Of Deferred Payment Of Perpetual Bonds For Enterprises In China ——Taking Hainan Airlines Co.,Ltd.as An Example

In recent years,under the environment of sustained and rapid economic growth in China and the gradual improvement of the market economy system,science and technology have developed rapidly,and the rate of knowledge update has accelerated dramatically.Since the first perpetual bond in the mainland market was issued in 2013,the relevant perpetual bonds were successively launched after that;they were separately regulated by different regulatory agencies at the time of issuance.The issue of perpetual bonds not only solved the companies’ long-term financing needs at a lower cost than other funding trades,but also effectively supplemented the company’s capital and reduced the Debt Asset ratio.At the same time,it also actively explores infrastructure and large state-owned enterprises to use the bond market on the exchange to facilitate further urbanization and promote the reform of state-owned enterprises.However,in terms of trade terms,companies can take such bond "perpetual" by renewing or not exercising the redemption right.Although this is available in theory,there are only a handful of bonds that actually exercise the redemption rights,and the discussion of deferred payment of perpetual bonds in the context of market under credit risk is even more tempting.Based on the case study of perpetual bonds related accounting treatment and corporate income tax policy issued by the Ministry of Finance,the case of deferred payment on perpetual debt can assist the follow-up application of perpetual debt in China.First of all,the article analyzes the issuance status and deferred payment status of perpetual bonds in China.Taking the Hainan Airlines Co.,Ltd.as an representative example,the economic consequences of deferred payment of perpetual bonds for enterprises are specified.Specifically,it evaluates the market effect of the announcement with non-exercise of the redemption rights,and the company’s operating efficiency and profit composition also have been tested.Investors make relevant suggestions on perpetual debt while companies make decisions on non-exercise of redemption rights also while investors put the currency into the bonds.The study found that the market effect was negative once the news was released and the fluency of the currency of the company is not satisfied through the event study method;it has aroused the close attention of different stakeholders.Finally,the article analyzes the potential risks of the deferred payments of perpetual bonds and state the suggestions.Issuers should adjust the structure of assets and be cautious in dealing with diversified operations of the business model risks,and the associated departments should follow up the relevant evaluation system on perpetual bonds,and refine perpetual debt accounting policies,and pay close attention to the company and perpetual debt financing trends during the whole procedure.The essay is no longer limited to the analysis of the economic consequences of traditional perpetual bonds issuing behavior,but analyzes the market effects of perpetual bonds after deferred payment decisions are made and the impact on different stakeholders is given.These are the principal innovation of the essay.Potential risk points were put forward corresponding countermeasures and suggestions,which have certain reference value.The shortcoming is that this essay stands for accurate case study of Hainan Airlines Co.,Ltd.,which can not completely represent each industry in China,so there may be defined,and the history of perpetual bonds in Chinese mainland is not long-standing.Effectiveness and potential risks of the long term could not be evaluated.