Analysis And Research On The Motivation And Effect After Redemption Of Perpetual Bond Financing

In recent years,China’s economic development speed has gradually accelerated,the demand for capital of enterprises with the growing economic development,most enterprises choose to increase financial leverage to achieve capital accumulation,to support their own sustainable development.The traditional financing method has the disadvantage of high debt service pressure and high debt ratio,which can not meet the increasing capital demand of enterprises,which leads to a new type of financing in the bond market-perpetual bond,which gradually arouses the attention of enterprises and begins to prevail.Luxi Chemical is a relatively strong chemical enterprise in the A-share market,in recent years,the development is particularly rapid,the demand for capital is greater.To this end,Luxi Chemical has issued two perpetual bonds,by the end of issued a cumulative billion yuan of perpetual bond,and in due and declared the debt redemption of perpetual bond.Therefore,this paper takes Luxi Chemical as a case company,analyzes and discusses the motivation and financing decision-making results of perpetual bond financing,with a view to providing reference significance for enterprises with similar development course with Luxi Chemical.Conclusions: First,the issuance of perpetual bond to consider the ability of enterprises themselves,enterprises in order to long-term and sustained development,bear the huge pressure to pay interest,the need for enterprises to have a high level of profitability and development capacity.Second,perpetual bond with the dual nature of debt and equity has its unique advantages,according to the status of China’s enterprises,the main issue of perpetual bond is generally a higher credit rating of enterprises,but the sharp rise in the interest rate of perpetual bond is also a risk that needs to be focused on,so in the enterprise issue of perpetual bond should be carefully chosen timing.Third,enterprises should improve the efficiency of the use of perpetual bond funds,enterprises in the financing of perpetual bond,to make full use of the low level of the previous interest rate when the project construction planning,strengthen the fund management of perpetual,so that the use of funds to maximize the efficiency of the use of perpetual bond before the maturity of the redemption period has the ability to repay the perpetual bond.Fourth,the regulatory authorities should establish a sound system related to perpetual bond,the relevant regulatory authorities must issue clear legal provisions,regulate the treatment of perpetual bond and information disclosure and other issues,especially the use of perpetual bond to make strict and detailed disclosure of the use of funds,so that investors can better understand the flow of funds,In order to supervise the use of funds to non-compliant projects,for future investors to make correct decisions to guide advice.