Study On The Motivation And Economic Consequence Of Phoenix Group's Convertible Debt Issuance

Exchangeable bonds were first issued in the U.S.in the 1970 s and became popular in Europe a decade later.Due to its low financing cost,difficulty in equity dilution and flexibility,coupled with the new wave of privatization in Europe and the United States,exchangeable bonds developed rapidly and later became popular in Japan,Korea and other Asia-Pacific markets.China only started to allow the issuance of exchangeable bonds after the issuance of the "Trial Regulations on Exchangeable Bonds Issued by Shareholders of Listed Companies" by the SEC to solve the problem of reduction of holdings of "small and large non-companies",and the issuance volume of exchangeable public and non-public listed bonds nationwide has reached 122 billion since 2017.The research on exchangeable bonds in China is in the embryonic stage,and the domestic scholars research on this theory is still shallow,and neither the depth nor the dimensions of the research are deep and diversified enough.Most of the studies are based on the preliminary operations such as pricing,conversion valuation and term design,and the studies on the purpose of issuance mainly focus on the motives of holding reduction and financing,and there is a lack of studies on other motives and factors of formation of motives such as arbitrage and capital operation,and there are only a few studies on the later economic consequences.This paper is of great relevance to the issue motives and economic consequences of exchangeable bonds.This paper adopts a combination of theoretical research and case study,firstly,it explains the significance and background of this paper,then it compares the literature on the motivation and economic consequences of exchangeable bonds at home and abroad,then it describes the definition and characteristics of exchangeable bonds,and analyzes the industry background,business situation and the whole process of issuing exchangeable bonds of Phoenix Group.Then,we analyze the motives of the issuance and summarize the three motives: financing motive,reduction motive and issuance cost motive.On this basis,the economic consequences of the issuance of exchangeable bonds by Phoenix Group are analyzed from the perspective of the issuer and the bondholders.The issuer's perspective is specifically analyzed from two aspects of issuance motivation and financial performance.From the standpoint of issuance motivation,the effect of successful financing,successful reduction of cost of capital ratio and optimization of capital structure is achieved after issuance.From the perspective of financial indicators,there are different degrees of improvement and enhancement in profitability,long-term and short-term debt servicing capacity,operating capacity and cash flow after the issuance.The bondholders' perspective is analyzed mainly from two aspects of investment decision and investment return.The article concludes with research conclusions and targeted recommendations.Phoenix Group issued exchangeable bonds,as a large number of exchangeable bonds issued in China,and raised a large amount of capital in a relatively short period of time,providing a fruitful capital supplement for the group's operation.At the same time,from reading the literature and papers,it is found that there are few studies on public exchangeable bonds in China,and most of the studies revolve around private exchangeable bonds,so this case plays a supplementary role in enriching the exchangeable bond studies.This study can provide reference examples for companies that will issue exchangeable bonds,suggestions for the competent regulatory authorities to strengthen the supervision of companies issuing exchangeable bonds,and cases for regulating the issuance of exchangeable bonds by companies in China.