Research On Financing Effect Of Enterprise Issuing Perpetual Bonds

Manufacturing industry occupies an important position in China’s economy,among which automobile manufacturing industry usually belongs to capital-intensive industry with high manufacturing cost,long production cycle and slow payment collection.In recent years,the products of automobile manufacturing industry appear high-end oriented and electric,our governments issued a variety of new energy vehicle subsidy policies.However,due to the decrease of new energy policies,new energy vehicles updating rapidly,the great pressure which the transformation of industrial structure and operation mode brought,slow inventory consumption,many of the automobile manufacturing enterprises are lack of funds.The perpetual bond is a kind of bond with no fixed maturity date and usually with interest rate jumping mechanism.When meeting certain conditions,it can be included in the equity account in accounting treatment,so as to enable enterprises to obtain financing funds and reduce the asset-liability ratio of enterprises.Creditors of perpetual bonds will not participate in the production and operation of enterprises.Thus,the issuance of perpetual bonds can help enterprises obtain more capitals without changing the equity structure when the traditional financing channels are insufficient.Yutong Bus is an automobile manufacturing enterprise whose main business is bus production and sales.In recent years,the quantities of its bus production and sales are in the leading position in the bus industry.The business of new energy bus has been supported by national policies.In recent years,the enterprise has invested a lot of money in the change of business model,the development of technologies of new energy buses as well as the expansion of business scale and other aspects.What’s more,the period of capital recovery is relatively long.In addition,the enterprise needs to repay the loans which are due.Thus,it is urgent to obtain long-term financing funds to supplement the operation funds.However,the asset-liability ratio of enterprise is at a high level in 2016.At this time,common bond financing will continue to increase the asset-liability ratio of the enterprise.Increasing issues in stocks will affect the rights and interests of shareholders,which needs a long time and costs a lot.In 2017,the perpetual bond 17 Yutong MTN001 issued by the enterprise was included in the equity account in the accounting treatment,which reduced the asset-liability ratio of the enterprise and helped the enterprise obtain 1 billion yuan of financing.This thesis mainly uses case analysis method,supplemented by event study method.Taking Yutong Bus medium-term note 17 Yutong MTN001 issued in 2017 as an example,it studies the financing effect of enterprises issuing perpetual bonds.Based on relevant theories and literature,it firstly describes the current situation of enterprises issuing perpetual bonds in China,summarizes the problems and causes in the process of issuing perpetual bonds,analyzes the current financing situation of bus industry and its motivation of issuing perpetual bonds,and then analyzes the financing effect of Yutong Bus issuing perpetual bonds.And then it introduces the basic situation of Yutong Bus from its industry status,financial status and financing situation,and then introduces the specific terms of the perpetual bond according to the financing manual,and analyzes the key terms.From the four aspects,including financing cost,financial indicators,market reaction and financing risk,this thesis analyzes the financing effect of Yutong Bus issuing the perpetual bond,summarizes the results,and puts forward suggestions to various parties related to the financing of perpetual bonds,such as issuers,regulators and investors,so as to promote the optimization of the financing effect of perpetual bonds.