A Research On The Financing Motivation And Economic Consequences For China Fortune’s Perpetual Debt Financing

As housing prices continue to rise recently,this has forced the state to continue to introduce series of policies to curb the housing speculation boom,which has also directly led to real estate companies which have relied on credit financing in a long time have difficulties in using traditional debt financing.Meanwhile,perpetual debt shown on the market in the mainland of China in 2013,its debt-like and equity-like characteristics began to make it quite popular in the real estate industry.In this study,the thesis will take China Fortune as the investigation object and take the adjustment of financing channels as the analysis content to explore the company’s choice of external financing channels,and explore the reasons why China Fortune chose perpetual debt financing mode as the financing tool instead of equity and debt financing methods,this thesis would make the analysis from both internal and external levels of factors.The study found that due to the industry characteristics of real estate enterprises and the layout of China Fortune’s industrial new city strategic,China Fortune Land Development has a great demand for funds continuously,but at the same time,due to the national policies such as tightening loans,as well as the restrictions of the enterprise’s own equity structure and financial status,China Fortune Land Development has to turn to consider issuing perpetual debt to expand financing.In terms of the effect of perpetual debt issuance,through the analysis of four perspectives of financing cost,revenue,financial risk and market reaction,it is finally found that: perpetual debt financing is better than equity financing in terms of cost and revenue and slightly inferior to ordinary debt financing;in terms of financial risk,perpetual debt has little impact on the financial situation of the enterprise;in terms of market response,market investors have a positive attitude towards China Fortune Land Development after issuing perpetual debt in the short term,but Long-term attitude is not optimistic.