Research Of The Financial Impact Of H Power Company’s Perpetual Bond Financing

Perpetual bonds are bonds with no specific maturity date and a long maturity date.The holder can get the corresponding interest according to the agreed period.However,the right to repay the principal cannot be claimed during the existence of the bond.Compared with equity financing and ordinary debt financing,perpetual bonds have the dual attributes of equity and debt,which can reduce the level of debt ratio and increase the cash flow of enterprises,and are sought after by various enterprises.Perpetual bonds in the Chinese market were launched in 2013,and the issuance scale continued to rise.As of 2019,domestic capital has issued a total of 496 perpetual bonds,with a total of 1.28 trillion yuan,while non-financial companies issued 684.6 billion yuan and issued 485 bonds.Through the method of case study,this paper takes the 3 billion yuan perpetual bonds issued by H company in 2019 as the research object,and focuses on exploring the financial impact of perpetual bond financing on enterprises.First,take the research background and significance as the starting point,and explain the practical significance of this paper.Secondly,it gives an overview of the basic content of perpetual bonds,analyzes the characteristics,advantages and disadvantages of perpetual bond financing,and summarizes the relevant financing theories,accounting treatment and tax treatment principles,so as to provide better theoretical support for this research.After that,it is an introduction to the case company in this article,mainly including the basic situation and financial status of H company.Then,the financing reasons,issuance terms and accounting treatment methods of H company perpetual bonds are expounded respectively.What follows is the core chapter of the H Company perpetual bond financing case study.First,assuming different financing methods,comparative analysis of individual capital costs,earnings per share dilution effects,and interest tax deduction effects.Then,the financial impact of perpetual bond financing is analyzed from three aspects: financial performance,stock price reaction and financial risk.Finally,based on the results of this study,suggestions and prospects are put forward.Through the case study of H company’s perpetual bond financing,it is found that the perpetual bond achieves the purpose of H company,solves the capital demand under the background of wind power "rush installation",and better achieves the funds required for enterprise expansion.It also lowered the asset-liability ratio and broadened financing channels,in line with the country’s policy orientation for "de-leveraging".But at the same time,it should be noted that although perpetual bond financing reduces the asset-liability ratio to a certain extent,it is only temporary and does not really improve the capital structure,and the market’s reaction to perpetual bond financing is also negative.Finally,the author puts forward suggestions for perpetual bond issuers,regulators and investors,and points out the shortcomings and prospects of this research.