Research On Motivation And Financial Effect Of Convertible Bonds Of Lingyuan Iron And Steel

In recent years,our economy has been in continuous recession,and enterprises of all sizes are faced with the situation of oversupply and low operating profit margin.How to deal with the challenges under the situation of financial distress has become the first key that enterprises are forced to solve.The reason why convertible bond is widely recognized by major enterprises is that it has two special attributes of equity and creditor’s rights.Foreign markets have been supportive of convertible bonds even before they entered the Chinese market.Since convertible bonds entered our country a little late,there is still a distance between them and foreign countries.It was able to sweep the domestic market because in 2017 the government issued regulations to support convertible bonds.In this situation,scholars need to study the convertible bond further under the circumstance conforming to the current situation in our country in order to develop the convertible bond further.This article takes Lingyuan Iron and Steel as a case company,and analyzes its convertible bonds issued in 2020 as an example.In terms of financing motivation,this paper analyzes the advantages of Lingyuan Iron and Steel in choosing convertible bonds from the perspectives of financing needs and financing costs.At the same time,after the issuance of convertible bonds by Lingyuan Iron and Steel,this paper analyzes the market reaction,financial performance and corporate governance effect after the issuance of convertible bonds by Lingyuan Iron and Steel in terms of the financing effect,so as to draw the influence of the issuance of convertible bonds by Lingyuan Iron and Steel,and draw the research conclusions and enlightenment of this paper under this premise.This case study is mainly carried out from the following parts: The first part,lays the theoretical foundation of the research.Collect and read the journal literature on convertible bonds,and summarize the issuing motivation and financing effect of convertible bonds.The second part introduces the case.This paper introduces the development status of Lingyuan Iron and Steel,as well as the overall issue and conversion of convertible bonds.The third part studies the motivation and effect of Lingyuan Steel issuing convertible bonds.The final conclusions are as follows: first,the reconstruction and expansion of Lingyuan Iron and Steel project requires a large amount of funds.Under the background of deteriorating capital structure,equity dilution and huge debt pressure,convertible bonds are the best solution among the options;Second,whether from the short-term or long-term market reaction analysis,we can see that investors are optimistic about the behavior of Lingyuan Iron and Steel to issue convertible bonds;Third,the financing of convertible bonds of Lingyuan Steel can effectively improve the profit rate of the enterprise after the implementation of operation,but there are still limitations.Through the study,this case also got some enlightenment:enterprises should choose the appropriate financing method and amount;In order to promote debt-equity swap,we should choose effective means to benefit investors.We should make full use of financing funds in order to effectively improve the economic level of enterprises.