Research On The Motivation And Economic Consequences Of Private Exchangeable Bond Issuance

Exchangeable bonds are financial derivatives with embedded options.The bondholders can convert the bonds into shares of listed companies held by the issuer within a certain period of time and according to agreed conditions.With the gradual opening of my country’s capital market,the China Securities Regulatory Commission officially launched exchangeable bonds in 2008.Until 2013,the issuance of my country’s first privately offered convertible bond "13Fuxing Bond" heralded the beginning of the development of our country’s exchangeable bond market.A series of support policies issued by the China Securities Regulatory Commission and other departments have supported the development of exchangeable bonds,making them have great market potential.In 2016,Sany Group successfully raised 7.35 billion yuan through the issuance of privately offered convertible bonds despite operating difficulties and insufficient capital turnover.Therefore,the case of Sany Group issuing exchangeable bonds is typical.On the basis of extensive review of foreign research literature,taking Sany Group’s issuance of privately-placed exchangeable bonds as an example,through the case study method combined with the event study method,the motivation and economic effects of its issuance of bonds are discussed in depth.Firstly,the research background and significance are expounded,the domestic and foreign literature research on exchangeable bonds on the issue motivation and economic consequences is reviewed,and the relevant theories used in the paper are expounded.Secondly,it introduces the basic situation of Sany Group,Sany Heavy Industry,the industry and the whole process of bond issuance,and analyzes the main issuance motives of Sany Group on this basis,including financing and reduction of holdings.Then,the economic consequences of bond issuance are analyzed in detail from the perspectives of the issuer,the target company and the bond holder.Finally,the corresponding research conclusions are drawn: the issuance of privately-owned exchangeable bonds by major shareholders of listed companies can achieve dual purposes,that is,they can raise funds through convertible bonds,reduce capital costs,optimize capital structure,increase the company’s solvency and profitability,and thus improve Company performance,and can successfully reduce the shareholding of the target company without affecting its own controlling position.At the same time,the issuance of bonds will also have a positive impact on the stock price of the target company Sany Heavy Industry,while bondholders can obtain capital-guaranteed returns by holding exchangeable bonds.On this basis,the research enlightenment is drawn: that is,the issuer should choose the appropriate company to ensure the successful issuance of the exchangeable bonds,and should make reasonable use of the private placement exchangeable bonds after the issuance of the bonds.It is hoped that the regulatory authorities will improve the quality requirements for information disclosure of privately-placed exchangeable bonds,and investors should invest rationally and pay attention to risks.